Innovation requires thinking about the future, and successful innovators have been trying to develop their futuring muscles to envision plausible scenarios for decades. Since the early 1950s, when RAND Corporation developed scenario analysis methods for the military, and the 1970s when Shell first used the scenario planning process for corporate strategy[i], the prospect of thinking rigorously about the future has given hope to numerous organizations. Strategic planners have long believed that they could get a leg up on their competitors if they could see through the fog and create a somewhat clearer picture about the technologies, products, customer demands and business models to come.
Some companies have made relatively good use of future insight initiatives to inform strategy and business decisions, but by and large the explicit pursuit of futuring has not had much impact on the corporate world. Even at Shell, the company that developed the modern corporate scenario planning process — upon which, by some estimates, 80% of futuring activities in the United States and Europe are based[ii] — the impact on actual business operations has been called into question[iii].
Today there is a renewed interest in formalized futuring activities spurred by the following forces:
- New futuring methods and techniques – ones that move beyond the decades-old Shell methods
- Wealth of data and information – volumes of information that is easily accessed and shared
- New, more structured systems of innovation –more formal processes that require a clearer future perspective
As a consequence, futuring is moving from the province of C-level executives and boards, as they devise long-term, global corporate strategies, to division heads responsible for P&L and to innovation leaders responsible for strategic innovation.
Success and Failure of Futuring
Connecting the future with the present has been a major challenge of futuring activities. It is very seductive to imagine and create scenarios of what the world may be like 25 years from now. The problem is, how does this inform the decisions and actions of the individuals running businesses today? In order to have impact, futuring activities must influence those decisions and actions or else it’s just an intellectual exercise.
Many current futuring efforts generally result in outputs that make it hard to connect the far future to the here and now. So what makes a futuring project successful, and what can negatively impact futuring efforts?
- Time horizon – How far into the future are you looking?
- Companies that successfully use futuring create insights that fit a 5- to 15-year time horizon — a timeframe that a business division can relate to
- Companies that struggle with futuring tend to create scenarios too far out to make any difference to current businesses
- Sensing systems – Can you see the events that should trigger some action?
- Successful companies create continuous sensing systems that prompt attention and action no matter when the specific events occur.
- Companies that struggle don’t have a mechanism to know what events they should be looking for and to continuously monitor the environment and flag when something significant occurs.
- Intermediate stepping stones – Is there a specific path to follow?
- Successful companies develop a specific path to the future, a set of milestones and conditions that the organization works towards.
- Companies that struggle have a vague view of a possible future but have not created a path for getting there.
- Strategic opportunities – What specific domains and opportunities is the company targeting?
- Successful companies connect their futures to specific, new strategic domains to explore and opportunities to pursue.
- Companies that struggle view the future as an abstract possibility that doesn’t inform new or specific offerings and business models.
- Options management – How and when to exercise options?
- Successful companies have an options mindset and approach to evaluating future opportunities.
- Companies that struggle treat future decisions as go or no-go.
These five areas must be addressed by any futuring initiative if it is to have a real and tangible effect on what business divisions do today and how they innovate.
How to Think About the Future: Weak Signals and the Options Mindset for Innovation
Thinking about innovative opportunities requires one to consider complex future scenarios, which of course include humans, the most quixotic and determined actors in the natural world. Books have been written[iv], processes developed[v] and societies formed[vi] dedicated to thinking about the future. One need only search for the term “future predictions” or “future scenario” to see hundreds of predictions — about technologies, industries, customers, societies and economies. But all of this information is table stakes; it’s available to anyone, and none of it will give a company any competitive advantage.
Even commissioned future studies tend to be so generic, high level and broad that they rarely provide a proprietary advantage. If your company is commissioning such a study, so are your competitors.
A future vision with real impact and effect must have two main attributes:
- The envisioned future must say something about your specific business in the future, not just your industry or society, and it must say something about what your existing company is uniquely positioned to take advantage of over your competitors.
- The future vision must take into account known consensus trends and also encompass “weak signals.” Weak signals are much less obvious and, when properly identified and interpreted, do provide you a proprietary view of the future.
Weak signals are those things that are happening now, perhaps sporadically and/or quietly, and are indicative of a force or trend that will become significant in the future.
Weak signals are key to futuring. Yet they are notoriously difficult to discern from noise.. Thinking about the future, then, requires the ability to think clearly about weak signals and not get fooled by seemingly significant patterns that turn out not to have any real lasting input.
In addition to the ability to discern and interpret weak signals, an options mindset[vii] also is necessary for successful futuring. An options mindset means you are able to keep multiple future possibilities “open” at once. On a practical level, this means several paths are possible based on multiple factors (and multiple futures). Deciding which path to take should be done as late as possible. In other words, keep your options open as long as you can.
Options thinking is difficult for people and for companies. We typically want a detailed plan we can follow and do not like the uncertainty of contingent possible outcomes. But this is exactly what futuring demands. Since no one can accurately predict the future, the best we can hope for are a set of multiple, plausible future visions that we acknowledge are still incompletely and inaccurately defined. An options mindset and approach, based on these future visions, is needed to handle the uncertainty and probabilistic way that the future actually unfolds.
Mid-Future Insights: The World in 5 to 15 Years, When it Matters
How do you think about the future? What are the ways of exploring the possibilities? How do you imagine a complex system and then make sense of it? How do you create stories that resonate with people so they can truly understand the possibilities?
These questions and many others occupy the mind of the futurist. Answering them in the near term – 3 to 5 years – is easy. Just project the near past and you will have a reasonable approximation. Answering these questions in the very long term – 25 to 50 years – is also easy because the answers are not actionable and nobody will remember your prediction 10 years from now.
But answering these questions in the innovator’s sweet spot — 5 to 15 years — is not so easy. It’s a horizon far enough away to all but guarantee unexpected events yet near enough that current decisions matter. This is the time of maximum uncertainty of the future. It is where immediate past trends go non-linear and the effects of big forces are just emerging. It is for these mid-futures that we need new and better futuring methods.
Naturally, different industries and different companies within industries will have different time horizon sweet spots within the 5-to-15-year horizon. For information technologies, the relevant time horizon might be 5 years. For life sciences, it’s probably closer to 15 years. The pace of change, the nature of competition, the regulatory environment and the dynamics of consumer demand create different velocities of change. But even industries that change at a slower pace can have unexpected discontinuities that futuring efforts should try to uncover.
New Methods for Futuring
An amazing variety of approaches, techniques and methods (beyond the Shell-inspired scenario process) is available to the innovator. Combining these methods with the explosion of data and ultrafast computing possibilities is incredibly powerful.
New futuring methods, tools and techniques that deal with the big-data, constantly-connected world we now live in have been developed. These tools fall into four main categories[viii]:
- Searching and Gathering – Finding those snippets of information that are important for detecting forces, trends and weak signals of the future
- Synthesizing and Building – Crafting a collection of information snippets into relevant patterns and constructing dynamic and cohesive future state descriptions
- Imagining and Storytelling – Using the dynamic views of future states to imagine the company’s role and influence and develop stories that illuminate the key facets of action
- Activating and Implementing – Setting up an option system of sensing and acting conditioned on triggers and criteria derived from the futures created
The art of futuring is evolving into a discipline that can indeed affect the decisions of business leaders and provide direction for innovators. It should become an integral part of every company’s competencies.
Futuring is about discerning and interpreting weak signals and creating multiple plausible alternatives. It is about holding multiple future options in mind simultaneously and being able to manage the potentially conflicting outcomes. It is about not being locked in to the dominant paradigm and about realizing that what seems certain and inevitable will most likely not happen.
But something will.
And this something is not random, but dependent on the decisions your company, and many others, make. Thinking about the future in the right way will mean the difference between a mere intellectual exercise and actionable information that affects what your company does today and how it will proactively shape the future.
[ii] Bishop, P., Hines, A., Collins, T.; The Current State of Scenario Development: An Overview of Techniques; foresight 2007 9:1, 5-25.
[iii] Wulf, T., Meißner, P., Stubner, S.; A Scenario-based Approach to Strategic Planning – Integrating Planning and Process Perspective of Strategy; Leipzig Graduate School of Management working paper; July 2010