FOUR TOUCHSTONES TO OPTIMIZE MANAGERIAL FORESIGHT
In today’s hyper-competitive and complex world, organizational performance and strategic agility remain contingent on an in-depth knowledge of global trends and their complex interaction. The competitive pressure to remain resilient in an increasingly uncertain and unpredictable world raises the strategic value of managerial foresight.
Managerial foresight is a strategic management technique for anticipating risks and opportunities before they become obvious to market competitors and intelligent adversaries. Institutional and small business leaders who fail to onboard foresight practices as a part of their strategic planning process, risk losing their market share and even suffering catastrophic surprise.
What is managerial foresight?
Foresight methods in various forms have proliferated along with the rising demand for more effective decision-making processes and innovative business solutions.
Managerial foresight is an action-oriented, interpretive framework for use in testing operational performance under different conditions of uncertainty. It provides knowledge professionals with a way of generating breakthrough insights about episodic events, seemingly disconnected in both time and space.
At the core: three strategic questions
Although many different foresight models are available, they remain animated by three strategic questions:
- What is expected to happen in the future?
- What is likely to happen in the future?
- What is the desired future?
Each of these questions provide a pathway for exploring “weak signals” of transformative change and a way of facilitating truly unique perspectives that transcend business-as-usual thinking.
As a strategic planning instrument, managerial foresight creates the context for raising thought-provoking questions about alternative futures (in contrast to the expected future) as well as the intellectual space to design innovative solutions before they become obvious to traditional and non-traditional competitors. Using exploratory questions to consider how non-expected futures may impact the enterprise mission expands the range of strategic options (eg., short-term, mid-term, long-term) available to decision-makers.
Properly executed, foresight methods optimize the effectiveness of the policy design process by mitigating emergent risks (eg., group-think, cognitive biases, overconfidence) while generating profound insights about potential opportunities (eg., geo-political shifts, emerging markets, next-generation technologies). Over time, this imbues more resiliency and agility into the planning process.
Select appropriate time horizons
Foresight timelines may vary considerably depending on the issue or domain. They need to be set far enough into the future to allow sufficient time for truly innovative patterns and structural transformations to occur. Examples of issues with short timelines include election cycles and changes in consumer behavior (eg., popular entertainment, fashion trends). By contrast, foresight studies involving highly institutionalized processes such as infrastructure developments (eg., “smart cities,” dams, power grids), military procurements systems (stealth technology), and changes in strategic culture may take several years to unfurl. Demographic shifts advance at an even slower pace and may require an additional study period before their effects are fully known (eg., census data collection).
Time horizons that reach too far into the future may be too unsettling for some participants, causing delays in acceptance. This is a critical consideration. A lack of participant buy-in could place additional pressure on project managers, who are accountable to their superiors for allocating resources and defending the end-results. While foresight studies frequently adopt 10 to 15-year timelines, participants may be more comfortable with a five to seven-year time horizon.
Avoid common misperceptions
One of the most common misperceptions about foresight methods is that they provide managers with a way to “future-proof” their policies and programs. Exaggerated claims that organizations can “insulate” themselves against future uncertainty create a false sense of security because they discount the risk that is inherent in all decision-making processes, both operational and strategic. Foresight methods enable knowledge practitioners to explore alternative futures, thereby gaining a competitive edge over their rivals, but it is important to clarify that foresight techniques are not prediction-making tools.
There is also a tendency to use foresight and forecasting interchangeably. However, there are nuanced differences between the two methodologies. While forecasting techniques use historic data to make straight-line projections about the expected (or “baseline”) future, foresight is a strategic management technique for infusing non-linear and creative thinking into traditional planning models. At the same time, forecasting can provide a valuable benchmark for use in building the multiple scenarios future.
Embed foresight into strategic planning
Uncertainty about the state of international affairs and the global economy is challenging private and public leaders to become more adept at agile decision-making with less-than perfect knowledge. Consequently, there will be a premium on integrated frameworks that facilitate a better understanding of converging global forces and which enable the early identification of new sources of social and economic value.
Embedding foresight techniques into the strategic planning process provides actionable feedback that can be used to assumptions-test the enterprise mission. Moreover, by adopting a multiple futures perspective, knowledge managers and decision-makers can strengthen their capacity for proactive decision-making, building resiliency and agility into the strategic planning process.
This article is an adaptation of Developing a Global Mindset: Adopting a Strategic Approach to Knowledge Mobilization.