How long-term futures thinking helps with strategy now
"Long-term for us is two years!"
People who facilitate workshops hear certain phrases over and over again. The statement above, plus some variation of "I'll be retired or dead by then," are probably the two most common for those of us who regularly ask people to think about 2030 or beyond.
It's a good challenge, though: How does thinking about 2030 help you with strategy today?
At Forum for the Future, we see a false dichotomy between "sustainability strategy" and "business strategy." If you think it would be good if your business were still here in 2030, then you are aiming for a sustainable business. In that sense these two types of strategy need to become one, because otherwise a good portion of your strategy is likely to be unsustainable in the long run, i.e. it won't continue to create value. Let's focus on core strategy: How can you ensure that your business continues to thrive?
Keeping your company relevant for the long haul
It's worth spelling out that the long-term existence of your business is not a given: "Creative destruction" is a key idea at the center of our capitalist economic model, that the market continually reinvents itself. One of Vijay Govindarajan's three key reasons that successful businesses fail is that they focus on the marketplace of today and fail to plan for the future.
Plenty of case studies show how companies make these mistakes. The failure of Kodak in the face of digital photography (even though a Kodak engineer invented it) and IBM's losing millions in market share by failing to anticipate personal computing are two of the best-documented.
So when we look forward to 2030, it's with a view to placing better strategic bets today. We can't make predictions, but we can safely say that climate change, demographic shifts, technology developments and resource constraints hugely will change the operating environment for business, and the question is how ready you are for that.
During 2014, Forum for the Future has been working with the Retail Industry Leaders Association on a project called Retail Horizons that explores the future of U.S. retail. Together we have researched and identified the key trends that we think will affect U.S. retail and used these to create four future scenarios. We are working on a toolkit that will be shared at the RILA Retail Sustainability Conference at the end of September, and available freely online thereafter.
Take a trend like the one we call Retail Everywhere. This is a confluence of other trends — such as the ubiquity of smartphones, consumer desire for convenience and the growth of the Internet of Things. Retail is no longer confined to stores or even online: Instead, we see high-tech vending machines from the likes of Tesco and L'Oreal in subway stations. We see Amazon Dash, which allows you to scan something you have at home and add a replacement to your shopping cart. At the moment these are niche offers, but what is the implication for traditional bricks and mortar retailers if they become mainstream?
Forecasting many possible futures
Scenarios and futures work are great tools to help companies — in this case retailers — prepare now for an uncertain future: They can help your business to continue to deliver social and economic value, rather than let the future wash over you and see if you survive. Scenarios are plausible, coherent stories that describe alternative possible futures by exploring the interplay of different factors shaping those futures.
One of the simplest ways to use a set of scenarios is to challenge yourself to think, "Is our business model betting on only one of these scenarios coming true?" If the answer is "yes," then you are not future-proofed. If just two or three scenarios spell good news, what strategy adjustments can you make to help you get ready for the fourth?
An easy way to use scenarios is to run a regular SWOT exercise, but imagine that the scenario is your external context. Repeat for all four scenarios. What does this tell you about the future strengths and weaknesses of your business model? And then importantly, what does that mean you need to do now to get your business strategy on track? It may not mean a huge course correction, but adjusting strategic emphasis.
In this sense, futures work such as this needs to fit into your existing strategy processes and help challenge and inform them.
Top image of highways by JC+A via Flickr.