I love strategy. I think everything is strategy. My favourite book is “33 strategies of war”, but I am also a big fan of Kenichi Ohmae (found a paperback “The Mind of the Strategist” in my office recently), and I loved “Thriving on chaos” by Tom Peters.
Long term thinking is a lost art
I think strategy is very much underestimated as a skill set in business. I believe we have lost the art of the long view (another cracking book). We simply do not have the attention span to think long term. That is concerning. Your business is a race car. The faster you go, the further you need to look ahead. Or you can slow down.
Hence “Rethinking Strategy: How to anticipate the future, slow down change, and improve decision making”. In an increasingly uncertain environment, organisations must develop the sensitivity to anticipate emerging market shifts and turn future ambiguity into an ongoing strategic advantage. You need to be able to predict the future.
Strategy is not planning
Strategic design is about setting the organisation’s future direction and goals. It involves two significant creative steps. Reperceiving the future business environment and reconceiving the organisation’s role within these different futures.
Strategic design is the organisation’s principal creative and learning activity
It is the foundation of corporate entrepreneurship and innovation. And it is a business muscle that needs flex constantly. That means embedding a process that is creative, learning-based and participatory. If company-wide strategic understanding, belief and ownership are low, is it any wonder that strategic implementation is poor?
You need to develop the strategic muscle
The more the decision-makers feel that they understand their environment, understand the dangers but also perceive potential opportunities, the more are they able to take riskier decisions. The learning from scenarios ‘slows down change’. Change still occurs at the same pace; it’s just not perceived to be disruptive or overwhelming because the organisation can detect and make sense of it earlier and is rehearsed in its response. Rehearsing the future creates confidence. Participatory strategy development also speeds up non-routine decision-making. Proficiency in strategic design is also an internal capability that is difficult to replicate. It takes time to develop a corporate memory of the future.
There are three essential questions at the core of successful strategy development: What’s next? So what? Now what? And here it comes, central to this process is the art of developing scenarios and an appreciation for the anticipatory and transformational capacity that scenarios enable.
It is more than a trend watching
The book starts with trend watching. And gives an interesting perspective:
- Trends are not enough
- Trends are akin to moths being attracted to a flame. Pretty soon, every player in the industry is innovating to the same reasoning, until a new norm is established. It is a bit like best practice. Close-knit industries can be especially vulnerable to strategic surprise ‘because all the member companies look to each other for standards of best practice. Read “Breaking bad habits“.
- Trends are deceptive.
See beyond trends
In periods of rapid change, strategic planning based on straight-line trend extrapolation is inherently treacherous. What is needed for planning is not a set of isolated trends, but multidimensional models that interrelate forces, technological, social, political, even cultural, along with economics. The purpose of trend watching is to deliver strategic value: It should enable decision-makers to perceive their future external environment. To see beyond business-as-usual and to anticipate future discontinuities.
Scenario planning, then, is the process of developing strategic responses to these alternative futures, helping you think the unthinkable. Emotionally preparing you for change. Answering where the future fits? Driving strategic thinking and innovation. Answering how is your business performing now? What is your vision for where you want to take your business? What are your key strategies as to how you will get there? Very simple. But very difficult. Scenario planning helps you understand the different contexts that will ultimately determine strategic success.
Escape the present
Scenarios will help you define perceived future environments. It will help you reframing strategic design. It will stop you anchoring in the present. Anchoring restricts the organisation to repeatedly producing incremental, ‘faster horse’ strategies, when a new type of thinking is required. Helping you escape from the overbearing context of the present. Scenarios hold the key to this perceptual freedom.
Broaden your outlook
Scenarios will give you broad contextual outlook. It will stop you missing vital signals that are sometimes literally under your noses. It will help you to move beyond the industry’s boundaries. It makes it possible to anticipate embryonic issues and opportunities before they emerge. It will avoid paradigm blindness and complacency.
Paradigm shift indicators
The book gives you several paradigm shift indicators. And all are playing out as we speak.
- Dirty secrets. Which practices are the public unaware of, but if they were, it would alter their perception of who we are and what we do?
- Cultural hypocrisies. Cultural hypocrisies are enabled by the paradigm blindness that results from sustained exposure to a certain set of conditions.
- Unresolved tensions. What are the frustrations customers have with our products or services? What roadblocks do our processes or regulations put in the way of the customer’s experience? What unnecessary margins can others target? Do we give our customers a reason to stay? Which issues are tolerated that are universally disliked or drive people to despair? Which issues have the potential to emerge as unresolved tensions in the future?
- Systemic inequities. Who or what is marginalised or exploited by current policies? What events might cause these systemic inequities to reach a tipping point? Who outside of power is prepared to persist for their cause?
- Slow-burning issues. What is the price being paid for today’s behaviours? (What is being lost or becoming scarce?) Or, in the language of Sorokin: What is the false part of the dominant paradigm?
- Social values, is there a hierarchy of values that individuals and societies move through? If so, what is it? What conditions are required to facilitate the movement of individuals and societies along this hierarchy? What themes and behaviours are individuals and societies likely to be attracted to at each stage of this hierarchy? What are they likely to reject?
Setting the scenario horizon
Push yourself to a longer time horizon. Ten years is a minimum requirement. Because the horizon year should naturally be greater than the lead time required for the business to respond to it. The horizon year should also allow enough time for participants to consider significant future change, to overcome any attachment to today’s paradigms and to creatively engage with the exercise.
Map the corporate mental model
You need to make the mental models to the business explicit and map the perceptions, assumptions and priorities of key decision-makers. What is our purpose? What do we think is happening? What do we think could happen? What do we want to know? This articulation of the organisation’s mindset is ground zero for scenario building.
Ask your stakeholders:
- How do we position our business for sustained future success?
- How would you define the role or purpose of your organisation?
- Which external factors are having, or could have, a significant influence on your response to the strategic challenge?
- In relation to the strategic challenge, what significant developments do you expect to occur in the future?
- How might alternative expectations for the future differ from your own?
- In relation to the strategic challenge, what are the three things you would most like to know about the future?
- What does a prosperous / less than prosperous future for your organisation look and feel like?
- What are the major decisions on your planning horizon?
- What internal or external constraints present a challenge to future organisational change?
- Which events from the past, either internal or external, provide important lessons for the future?’
- Are there any aspects of your business that you feel are sacred cows or “untouchables”?
- What are the unwritten rules that guide decision making and behaviour within your organisation?
- When you move on from your role, what is it you would like to leave behind or be remembered for?’
Alternative perceptions are a great source of strategic insight. Perception pioneers introduce you to a new perspective. Perception pioneers point out things you can’t see; they introduce you to a new way of seeing. Organisations would do well to collate and cultivate a group of perception pioneers, integrating their insights into the ongoing strategic design process.
Do an environmental scan
Start with yourself. What do you think the futures could be? Now that you are aware of what you think, what counter-views exist? Awareness of initial perceptions should, therefore, ensure a broader, more balanced scanning process and output. Look at history. What where the drivers for past performance on technological, economic, environmental, political and industry level? Look for the fault lines that cast uncertainty over the future. Look for the cracks in the current system that loom as potential discontinuities offering both opportunities and threats.
Some other tips:
- Letting go of command and control
- Bringing everyone along
- Create diverse teams, where the variety of experience, knowledge, and opinion optimises the prospects for useful strategic insights. Read “Rebel ideas“
- Identifying influencing factors
- Sort and prioritising influencing factors
- Define critical scenario drivers (those influencing factors considered high impact and highly uncertain).
- Develop a shared understanding of the scenario drivers. Outline the scenario’s top-line features. Define the scenario’s push and pull factors. Describe the essence of the scenario. Populate the scenario. Backcast the scenario. Write the scenario.
- Define the push and pull factors. Address why this scenario would develop. Identifying the push and pull factors that could lead to your scenario outcomes grounds the scenario in the uncertainty of today’s embryonic and emerging drivers.
- Ask participants to give a sense of their scenario’s look and feel.
- Backcasting your scenarios back to the present, outlining a plausible pathway of events and outcomes that could contribute to the development of each end-state — a history of the future, if you like.
Writing scenarios is an immersive and reflective process that facilitates the generation of fresh insights. Step inside different worlds and to develop an in-depth feel for their drivers, characteristics and distinctions. Such immersion can be the most rewarding part of the process, drawing on the dual skills of analysis and creativity to uncover and express new insights in a manner that aids managerial judgement.
Take your time
Allow enough time to step inside each scenario and permit ideas and concepts to percolate and develop. Try to allow a minimum of six weeks between the scenarios workshop and the follow-up workshop on strategic positioning to give yourself enough time to fully understand and express the different insights within each scenario.
Take your pick
You then need to pick your scenarios. The’ no painers’, strategies that hold well under some scenarios and are indifferent in others. The’ no brainers’, strategies that hold well under all scenarios. The’ big gains / big pains’, strategies that hold well under some scenarios but may be adverse under others and the ‘no gainers’, strategies that are ill-advised under all scenarios.
Scenarios provide the essential context for anticipating the future. It is much easier after the event to sort the relevant from the irrelevant signals. You will have created memories of the future by visualising pathways forward to desired or anticipated outcomes. These memories of the future act as a sort of filter to prevent our being overwhelmed by information.
You have created a filter
Information is filtered according to its perceived relevance to our memories of the future, our expectations, goals and plans. Only by accessing our memory of the future can we detect and perceive meaning from amongst the constant volley of signals to which we are constantly exposed. We will not perceive a signal from the outside world unless it is relevant to an option for the future that we have already worked out in our imaginations.
In times of uncertainty and turbulence, organisations should develop an ‘arsenal’ of future memories. And given the fluidity of change, strategic outlooks need to be regularly refreshed to keep managerial perceptions sharp and organisational strategies in harmony with the environment.