Get Real About Your Company’s Future

We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. – Bill Gates

Highlights:

  • Companies make continuous bets on their future. But the future they bet on typically isn’t so different from today. For many, “future” is in fact a continuation of the immediate past and projections of near-term forces and trends that are easy to see and understand.
  • As the world becomes increasingly volatile, uncertain, complex and ambiguous (VUCA), longer-term disruptions are the greatest existential threat to a company’s growth and survival. At some point, there will be a discontinuity that will invalidate the company’s current conception of its future.
  • Effective futuring that includes the ability to gain insights into long-term futures with inevitable disruptions and discontinuities needs to be a key component of a company’s strategy and innovation efforts.
  • Relatively few methods and tools exist to help companies gain insights into longer-term futures that include discontinuities and disruption. Innovative approaches are filling this gap and proving their value to companies that adopt them.

When Apple introduced the iPhone in 2007, Research in Motion (RIM) was a major player in a worldwide market that sold about one billion cell phones annually (the term “smartphone” was new). RIM’s strategy depended on corporate IT adoption with centralized management, control and security of the devices. At the time, there were no widely recognized market research reports, customer insights, or technology roadmaps (except perhaps inside Apple) that projected what the world might conceivably look like in 2017.

Fast-forward to 2012, five years after the introduction of the iPhone — and three years after release of Android and Samsung’s first smartphone – RIM, Nokia and others, using the best business tools available, were still projecting future growth based on past performance. But it was already too late.

Virtually every company today finds itself challenged to imagine the world 10 years into the future, yet executives know, with absolute certainty, this world will be very different from today — and that it contains the seeds of their demise if they don’t accurately anticipate and adapt. But the tools used today to chart a path into the future – customer insight, market research, business intelligence, technology roadmapping and many others – are built for a continuation of today. These tools fail miserably in the face of the unexpected, yet inevitable, discontinuities that will create a very different world 10 years out. These are the futures that are the most consequential for a company’s long-term survival.

Our collective failure of imagination is caused by five related factors:

  • Momentum of legacy – A company’s past and present are a powerful anchor that can blind a company’s leadership to alternative futures, especially when these futures challenge conventional wisdom or threaten knowledge authorities.
  • Lack of attention – Companies do not have the time and resources to spend on futures when so much effort and time are required to deliver the next quarter and on one-to-three-year plans.
  • Contradictory incentives – Most corporate incentive systems today strongly reward only short-term results, creating little motivation for individuals to embrace medium to long-term initiatives.
  • Lack of tools – Futuring methods and tools are not widely understood or taught, and many “futurists” are often, rightly, viewed with skepticism.
  • The relevance to “now” – Even if a company spends time creating alternative futures, there is often, legitimately, little connection to how these futures inform what should be done today.

These factors call for a new approach, with related methods and tools, to create futures that are specific, insightful, and actionable today – in other words “futures with a focus.” These focused futures need to:

  • Be brief and to the point — describe specific situations with brevity.
  • Contain cohesive vignettes – present sensible stories based on plausible trends.
  • Articulate artifacts, experiences and influences – expand beyond technology.
  • Include trajectories back to the present – provide insights into what you should do today.

A company needs to spend time, and have a mechanism, to throw off the momentum of legacy, to focus attention and employ effective tools to imagine very different futures. Organizations need insights that inform actions they can take today to prepare for these alternative, and invariably unpredictable, futures.

Before Discontinuity vs. After Discontinuity Futures

For a moment, imagine a company with no vision of its future, whose only concern is the here and now. Would that company invest in R&D? Conduct market research? Technology roadmapping? Would it have a new product development or innovation process? No. Instead, the company would live in the moment, constantly fighting fires, reacting to specific customer requests, and striving to operate efficiently but always being surprised.

Despite what it may look like at times, companies do not behave this way. Companies must focus on the future, and they are intensely interested in how the market is changing, what their customers will want, how technology is developing and what their competitors and partners are planning to do. What’s at issue, rather, are the types of futures companies choose to focus on.

Think about your company’s collective focus of attention. Start with one week, then consider one month, then one quarter. Extend it to one year, three years, five years. Go out 10 years, 15, 20. How much total time and attention does the company spend as you move farther out? When does it start losing interest?

Typically, companies lose interest, measured by the total amount of attention, beyond three to five years. But now ask yourself, when do things really start to get interesting? The most impactful forces tend to exert their disruptive influence beyond five years from now. Somewhere along this continuum from one week to twenty years is an inversion point. Before this point, projecting forward from the present works well; what has happened in the immediate past is a pretty good indicator of what will happen next.

At some point however, perhaps five to ten years from the present, linear projections based on the past begin to feel shaky and cause discomfort. In five to 10 years, some disruption or discontinuity will almost certainly occur.

Let’s call the period before a discontinuity BD and the period after a discontinuity AD. The exact timeframe will vary by industry (although not as much as some may suspect). Figure 1 illustrates the present-forward BD period and the future-back AD period.

Figure 1 – Present-forward and future-back perspectives

As with any transition, the shift from BD to AD occurs over a period of time and is not always noticeable. After the fact, the inflection point becomes clear, but as we’ve seen, that point of clarity often comes too late.

To deal with this transition from a BD to an AD world, companies must adopt both “present forward” and “future back” perspectives.

BD futures are what companies do all the time with the many near-state methods and tools you know well: strategy, market research, customer insight, technology road-mapping, business intelligence and on and on. Envisioning the near-state helps determine the activities undertaken to achieve that state – in other words, the innovation and development of new offerings, business models, operational and organizational changes. Therefore, the detail and robustness of the nearstate vision is extremely important since it will influence everything the company is doing now.

This present-forward approach relies on projections from the immediate past and present state. It is informed, but also burdened, by the momentum of legacy.

The ‘momentum of legacy’ is the collective culture, mindset and motivation of the company that drives its current behaviors. It is both a blessing and a curse. It is what has driven the company’s success to date, but it is also what can limit a company’s success in the future. The objective of developing the capacity to create new perspectives, unburdened by a company’s legacy, is not to throw out the BD, present-forward perspective, but to augment it with an AD, future-back perspective that can expand the possible business design envelope of the company and free it to consider alternatives it would not have otherwise.

The BD perspective and BD futures are the realm of sustaining innovation and are necessary. But in this increasingly VUCA world, they are not sufficient. Some discontinuity in the next 10 years is going to render the Near state invalid. Furthermore, it will be very difficult to see in real time that the discontinuity is happening – unless one is prepared for it (or causing it themselves).

What companies need is a corresponding set of future-state methods and tools to create the AD futures that define the realm of strategic innovations. They offer an alternative, future-back approach to envisioning a nextstate future. Such a future accommodates the potential discontinuities that invalidate near-state vision companies rely on to inform virtually all current activities and investments.

As the world becomes increasingly VUCA, long-term futuring – 10 years and beyond – will determine a company’s success. Near term (three-to-five year) future insights will become increasingly automated and commoditized. Identifying current patterns, forces and trends will be done by AI. We are seeing this happen now in the rise of companies such as CBInsights, Quid and many others that are using AI and natural language processing to help identify patterns and trends.

The probability of a discontinuity happening within 10 or so years is dramatically increasing. Discontinuities – in technology, customer behavior, ecosystem dynamics and other areas – are inevitable, but near-state tools provide little in the way of preparing for them. Since, by definition, discontinuities and disruptions defy prediction, different methods need to be deployed to gain insight into what the future could look like. The goal is not to predict but to prepare.

Focused Futures – Creating Futures that Can be Used Today

Humans have been thinking about the future since we transitioned out of the hunter-gatherer stage. The modern era of futuring being used for business purposes can plausibly be set in the late ‘60s and early ‘70s when Ted Newland of Royal Dutch Shell developed a scenario planning process and today there are many futurists and futuring approaches that challenge a company to broaden its perspective. Most often, however, the futures created by these methods are big-picture visions.

Such big-picture visions of the future can provide insights that expand and influence current strategic thinking, but they often lack the specifics to effectively inform current actions. These include the details of a future product or service, an experience or a business model. In other words, what’s missing is a focused future that envisions something the company could plausibly offer to customers 10 or more years from now and which they can start working towards today. This may sound crazy or impossible to do but the point of the exercise is not to detail an exact offering the company should start developing now but instead to envision a realm of possibility for which the company can start getting prepared. Doing this is entirely possible and indeed necessary if a company is to prepare for inevitable disruption.

The Focused Futures approach, methods and tools enable companies to prepare for the inevitable discontinuities that will happen in the next decade. Focused Futures excels by pinpointing the experiments, partnerships and development activities that companies should be doing today to bring clarity and position themselves for multiple eventualities. Focused Futures does this through a three-step process, a process not unlike that used to create a movie short or short story:

  1. Develop backstory. Research and identify the relevant forces and trends with respect to three categories – demand, design and system. Select the key trends and project them forward 10 years. (Use imagination to accommodate possible non-linear transitions.)
  2. Create a storyboard and narrative. Create “day-in-the-life” vignettes that involve specific people in specific roles, with the protagonist needing to accomplish specific tasks to satisfy specific needs and desires. These vignettes should contain specific artifacts, experiences and influences that reflect the future world.
  3. Review and interpret. Deconstruct the concepts contained in the vignettes into their constituent jobs and effects. Backcast these from the future to the present, creating reasonable stepping stones along the way. Use these stepping stones to develop insights for experiments and opportunities and for forecasts to guide sensing activities.

These three steps may seem simple, but they require an amount of effort (e.g. maintaining a comprehensive, up-to-date set of trends) and skill sets (e.g. storytelling and future projection) that are typically not cultivated or highly valued in most corporations.

Develop Backstory: Forces and Trends are the Creative Drivers of Futures

The key inputs into the creation of future vignettes are forces and trends. Forces and trends describe change. Technically, forces drive trends, but for practical purposes, describing a trend is virtually impossible without also describing the force causing it. Here, we focus on trends, realizing that the cause of the trend is inherent in its description.

A trend, however, is very different than an enabling technology. An enabling technology is what allows a trend to happen (but is not necessarily the cause). For example, blockchain is an enabling technology. Blockchain is what allows trends such as disintermediated stores of value, micropayments or auto-executed contracts to take place. Many so-called trends (e.g. AI, cloud computing, nanotechnology or CRISPR) are, in fact, enabling technologies. They are important and need to be cataloged, tracked and documented, but they are not, in and of themselves, the trends that generate the sort of insights we seek.

A trend describes a change that takes place over time. Since change is ubiquitous and constant, the key to creating a useful set of trends is to have a system for identifying and describing trends that satisfies the strategy and innovation needs of the organization. You can find lists and descriptions of trends in many places. However, sensing trends involves more than just going to the Trendhunter site or relying on the macro- or megatrends circulating online. These generally have limited value to innovators because: (a) they are not tailored to the future of your specific industry niche or market segment and (b) they are not proprietary and therefore do not give you any special insight or advantage – everyone has access to them.

Having a good way to develop, catalog and maintain a proprietary set of trends customized for the organization is important. This catalog should have a way of categorizing trends in different ways, including:

  • By subject: Is the trend about changes in future demand, design, or system? Demand trends involve current and future customers, what they need and desire. Design trends encompass both underlying technologies and how they are used (the designs that incorporate them). System trends describe how the ecosystem works, and that involves regulatory, political, sociological, environmental, economic and other exogenous factors.
  • By consensus: Is the trend established, becoming mainstream, just emerging, or still a weak signal? How broadly is the trend recognized? Trends like “urbanization” or “personalization” are so broad and all-encompassing they can be applied to virtually any situation. While it is necessary to know and understand these trends, they provide no differential advantage.
  • By breadth of impact: How widely is the trend felt? How ubiquitous is its impact? A megatrend like urbanization applies to the world and affects everyone. Other trends are specific to industries, geographies, companies or even groups of individuals.
  • By nature of the change: Since a trend is about change, it is useful to indicate the type of change occurring. In general, trends are growing, transforming, or declining.

Every company should be identifying (sensing) and tracking trends that could be relevant to its business. Having a means to systematically identify and describe trends and make them up-to-date and accessible to the people who should use them is a best practice whether or not you do any futuring. Trends are useful in many business practices, from strategy development to innovation to R&D and IP strategy, and having a regularly updated trend database, especially for trends that are weak-signal and emerging, is a valuable asset.

Create a Storyboard and Narrative : Vignettes help focus understanding

The centerpiece of a focused future is the vignette, also called a day-in-the-life story (even though it usually occurs over more than one day). These short stories are the outcome of extensive research and development into forces and trends, as outlined above, and a creative storytelling process. The result is a compelling, specific and revealing story about a future situation. The key to the vignette is that it centers not just on technology but on specific artifacts, which can be comprised of multiple technologies, and the experience of using or encountering these artifacts within the broader system that enables an experience.

The vignette is structured as a four-panel graphic story as shown in Figure 2. This structure is broadly useful, although vignettes can follow a number of other structures depending on the situation.

Panel 1 – conflict, issue, problem

Panel 2 – awareness of a possible solution

Panel 3 – solution experience, its function and feeling

Panel 4 – result or outcome, its implications

Even when varying the vignette structure, creators should follow these four key principles:

  • Set it about 10 years in the future. You want to stretch the imagination.
  • Make it personal. Be sure to include a defined protagonist and other characters.
  • Render it as a human experience. Describe actions, thoughts and experiences, not technologies.
  • Make it plausible. Each element should have an explanation.

The following is an example of a vignette about a healthcare future.

Figure 2 – An example ‘day-in-the-life vignette about a future situation

To create the vignette, select and focus on no more than three trends from multiple categories (e.g. don’t select two design trends), and project the selected trends out 10 years. The 10-year future states of the trends are then woven together to create a plausible story with a protagonist, other characters, a situation, a set and a storyline.

Creating these vignettes is both art and science as it requires a balance between imagination and plausibility. In some vignettes, fantasy and wishful thinking overcome the story creator. In others, the creator is not nearly adventurous enough. Hitting the plausibility sweet spot is difficult but gets easier with practice.

Review and Interpret: Derive Insight and Action from the Future

Often, a well-crafted, widely shared vignette will promote questions, discussions and creative thinking among many people within the company. Discussions by executive leadership, marketing, research and engineering as well as innovation teams all benefit from a well-developed set of future vignettes . This is valuable in and of itself, but vignettes can do much more, leading companies to specific actions through these steps:

  1. Extraction – Identify the specific artifacts, experiences and influences (i.e. system dynamics) contained within the future story.
  2. Decomposition – Break down the artifacts, experiences and influences into their constituent jobs and effects.
  3. Backcasting – Take the jobs and effects and backcast them from the future to the present as a series of stepping stones along a path or trajectory.
  4. Analysis – Identify the gaps between now and the first stepping stone. These gaps indicate the relevant experiments to undertake, and the relevant developments to focus on, today.

As you take these steps, the vignette will inevitably provide insight into possible new opportunities and strategic options that can be inserted into the innovation system or into strategy formulation. We have guided many companies, across a range of industries, in using this well-established methodology to significant effect.

What Your Futures Need to Tell You

Numerous companies use futuring in one form or another to create scenarios that inform strategy. But few companies have taken the next step to employ explicit futuring initiatives as an integral component of their innovation system. This might be due to a lack of awareness or, more likely, to past experiences with futuring initiatives that led to few or unsurprising insights and bland generalities that were difficult to act on. Companies are realizing that a three-to-five-year time horizon leaves them unprepared for the discontinuities that will occur over the next 10 to 15 years. Without this long-term perspective, companies will be at a loss when faced with inevitable disruption.

Strengthening a company’s Focused Futures capability helps it gain such a perspective through:

  • Awareness – Focused Futures creates broad awareness of potentially disruptive developments and well-researched insights on new technologies and emerging solutions that inform a company’s understanding of how the future might unfold.
  • Experimentation: Focused Futures identifies the most significant artifacts, experiences and influences – the components of the futures you create – for experimental evaluation and to demonstrate their relevance to the organization through hands-on learning experiences. Present- day experiments let companies test the technologies, behaviors and complex system dynamics that will be required if possible futures were to happen.
  • Imagination: The Focused Futures approach unlocks collective imagination and creativity to move beyond the momentum of legacy. The futures created expand our corporate imaginations to think about the possible and not just the probable.
  • Influence: A Focused Futures approach influences the organization’s strategies by providing a credible, trusted source of insight to senior leadership. It creates cohesion through a common understanding among various groups and activities and establishes new internal and external relationships that help inform and direct investments for both core and new projects and products. It identifies new transformational opportunities for the innovation pipeline and provides well-researched, relevant insights to solve existing and future business problems.

To get a good sense for whether your futuring capabilities might benefit from a new approach, answer these two questions: What alternative, long-term futures is our company considering? Are these futures actionable today? In our increasingly VUCA world, organizations that expand their innovation repertoire to answer them will be better prepared to thrive.

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