Strategic Foresight
Strategic foresight is a systematic way of using ideas about the future to predict and better prepare for change.
A Comprehensive Guide to Future Readiness
When the COVID-19 pandemic hit in 2020, the world was thoroughly unprepared for its consequences. Even though we have experienced many epidemics and thought we had some idea of how to address these healthcare crises, the coronavirus proved unique, tricky, and resilient. This pandemic is just one example of how rare events can turn the world upside down, disrupting businesses, jobs, and entire industries.
In this era of rapid change and rising uncertainty, strategic foresight has become a critical tool for organizations and governments. It is a systematic way of using ideas about the future to predict and better prepare for change. By exploring different potential futures and the opportunities and challenges they could present, strategic foresight allows us to make better decisions and act now.
What is Strategic Foresight?
Strategic foresight, sometimes called futures studies, is a way for organizations to collect and understand information about their future work environment. This information can include changes in politics, economy, society, technology, and laws.
While Market Intelligence has been around for a long time, Strategic Foresight is pretty new to businesses and public groups. Because of this, many people are unfamiliar with the terms used in this field. But in a world that’s volatile, uncertain, complex, and ambiguous (VUCA), not having a good foresight program can lead to big problems for all kinds of organizations.
Many professionals believe they can predict changes in their industry or area, at least for the next few years. However, the biggest threats or opportunities often come from other industries first. New trends or changes can pop up in related areas or wider society. At first, these may seem unrelated, but they often drive change that will eventually impact one’s own future, sometimes in dramatic ways.
That’s why it’s essential to understand the big picture of changes in industry and society. But just understanding these changes is not enough. While you can have a good idea of changes happening within the next two to three years, it gets harder to look at changes that are further away. As you look further into the future, there are more and more possibilities.
According to PwC’s annual CEO survey, chief executives are aware of the looming threat of disruption, but admit that preparing for it can be challenging. Almost 40 percent of them believe their company will not be financially sustainable 10 years from now if it maintains its current trajectory. This sentiment is echoed across various industries, including technology (41 percent), telecommunications (46 percent), healthcare (42 percent), and manufacturing (43 percent).
The Role of Strategic Foresight
Strategic foresight is becoming popular in big companies, governments, and non-profit organizations. Recently, experts have been discussing how foresight and innovation management are connected.
Strategic foresight can be used in different ways. For individuals, it’s about setting personal and professional goals and making plans to reach these objectives. For organizations, it’s about improving how they do business. For society, it’s about imagining the next stage of civilization that goes beyond our current technology-focused world.
Strategic foresight is all about creating a clear and useful view of the future and using that view in helpful ways. This application could mean spotting problems before they happen, guiding policy, shaping strategy, or finding new markets, products, and services. It’s a mix of methods for thinking about the future and strategic management.
An example of organizations using Strategic Foresight is the European Commission, which annually publishes its Strategic Foresight Report. For 2023, the focus is on becoming climate neutral and sustainable, a transition that will boost the EU’s strategic autonomy, competitiveness, and global leadership.
However, this change will bring challenges and require decisions that will rapidly and significantly impact societies and economies. The 2023 report outlines these challenges, suggests action areas for a successful transition, and recommends adjusting gross domestic product (GDP) to include factors like health and the environment.
The Importance of Strategic Foresight
Without Strategic Foresight, an organization may still have a good understanding of the short-term trends in their industry or even general long-term trends in society. But, more is needed in an interconnected world where change is occurring rapidly, and the boundaries between sectors are blurring.
What happens on one side of the world has an impact somewhere else. A small startup today may bring down the largest company in the world tomorrow. Political instability can change the balance of power and have widespread consequences across the globe. Not to mention no one knows where artificial intelligence (AI), automation, and other rapidly developing areas will take us.
Fortunately, systematic foresight activity has gained momentum, with these topics dominating conferences and business meetings. More and more organizations want to understand how the world is changing and how they can capitalize on these changes. The purpose of Strategic Foresight is to help them with this challenging task and to ensure that organizations make decisions based on carefully analyzed views of alternative future scenarios.
According to a 2017 study, companies ready for the future (“vigilant”) had a 33 percent higher profit, and their market value grew 200 percent more than the average. Conversely, firms that weren’t as prepared for the future saw their performance drop by 37 to 108 percent.
Benefits of Strategic Foresight
Get ready to handle change.
One of the main advantages of strategic foresight is that it helps you get prepared for change. By spotting new trends and possible disruptions early, companies can adjust their strategies and operations ahead of time instead of just reacting to change after it happens. This way of looking ahead helps organizations stay one step ahead of competitors and grab new opportunities as they come up.
Boost new ideas and creativity.
Strategic foresight can encourage new ideas and creativity within an organization by looking at different futures and questioning common beliefs. As companies spot new trends and think about possible responses, they are pushed to think creatively and develop new ideas, products, and services. This creative way of thinking helps businesses stay ahead and keep their competitive edge in the market.
Avoid problems and grab opportunities.
Strategic foresight helps companies better understand the risks and opportunities of different future scenarios. By studying and understanding possible outcomes, organizations can make smarter decisions about their investments and resource use. And by being proactive about managing risks, companies can avoid expensive mistakes and take advantage of opportunities that might otherwise be missed.
Encourage a culture of learning and flexibility.
Using strategic foresight in your organization’s processes encourages a culture of learning and flexibility. Employees learn more about the forces shaping their industry by continuously exploring future possibilities and improving at handling change. This flexibility and resilience is very valuable in a business world that’s becoming more complex and uncertain.
Strategic Foresight Methods
Here are some of the most commonly used methods in Strategic Foresight, depending on the organization’s goals.
Signal Analysis
- Signal analysis is about spotting signs of future changes in the present.
These signals can be products, policies, events, and experiences that show us how the world is changing. - Signals are different from drivers, which are big, long-term trends that will significantly impact the future, like climate change or the aging population.
- In foresight, weak signals are early signs of possible future changes that are uncertain and have a small impact. Strong signals are surer signs of future changes that will have a big impact.
Goal
- Organizations use signal analysis to prepare for the future by spotting potential changes and making strategic decisions based on that information.
- But signals may not always be clear or reliable, and it can be hard to tell which signals are genuine signs of future changes and which are just noise.
Methodology
- The STEEP (social, technological, economic, environmental, political) framework is a helpful way to analyze signals. It examines social, technological, economic, environmental, and political signals.
- When analyzing signals, it’s essential to look at the fringes of a field or industry, be aware of biases, and consider changes outside one’s industry.
Horizon Scanning
- Horizon scanning is a method to spot early signs of potential threats or opportunities.
- It involves systematically looking at possible developments that aren’t yet widely considered.
Goal
- Organizations use this method to identify signals that show current or upcoming changes. These signals can be discussed and evaluated to spot emerging issues that might not have been noticed yet.
- The benefits of horizon scanning include better anticipation of issues and opportunities, improved decision-making, increased readiness, and the ability to spot trends.
Methodology
- The exploratory scanning approach gathers potential concerns from various data sources.
- The issue-centered process identifies critical documents that provide important information about potential issues.
- The best combination of techniques depends on the organization’s goals, public awareness, potential risks, and the impact of the problem.
Scenario Analysis
- Scenario analysis is not about making exact predictions but about considering different possible futures and the choices and consequences that might come with them.
- This method was developed in the 1950s and is now used in many fields, including public policy and defense.
Goal
Organizations use scenario analysis to help them plan for the future, understand the background of a signal and its potential effects, explore possible future states, monitor competitors, and make better decisions.
Methodology
- The process usually involves identifying a specific issue or decision, identifying and analyzing key drivers, ranking these drivers based on importance and uncertainty, selecting scenario logic, developing storylines, and exploring the implications of these scenarios.
- It’s crucial to involve a diverse group of key decision-makers, external experts, and others with valuable perspectives in the scenario-building process.
- This group can include people from different backgrounds, such as science and technology, social sciences, environmental sciences, economics, and demography.
Near-term reasons to use foresight
Product ideation
Collect inspiration from future trends to design new products, services, policies, and business models your organization can invest in today.
Cross-industry market intelligence
Collect market intelligence about emerging trends happening in industries outside your team's area of expertise that may directly or indirectly impact your organization's operations.
Scenario building
Explore future (five, 10, 20 years+) business scenarios that your organization may operate in and identify actionable strategies for success in these future environments.
Early warning systems
Establish early warning systems to prepare for market disruptions.
Strategic planning & policy development
Identify future solutions to complex present-day challenges. Use these insights to implement inventive policies and action plans in the present day.
Tech and startup scouting
Research the technologies and startups/partners necessary to build and launch a future business idea or a future expansion strategy for a target market.
Funding prioritization
Use scenario-building exercises to identify research priorities, plan science and technology funding, and plan large public expenditures that could have long-term consequences (e.g., infrastructure).
What makes a Strategic Foresight initiative successful?
To successfully use strategic foresight, you need good planning, execution, and regular checks. Here are some essential things to remember:
Support from leaders
Top leaders need to be dedicated to using strategic foresight. They should be ready to give the time, resources, and support needed to make it work well in the organization.
Creating a good foresight team
The team should have people with different skills and backgrounds. They should be able to research, spot trends, analyze data, and turn what they learn into plans that can be implemented.
Working with others in and outside the organization
Foresight can’t be done alone. It’s important to work with others in the organization to ensure the information from foresight is useful and can be implemented. This technique includes collaborating with different departments and outside stakeholders to spot new trends and opportunities.
Being flexible
The future is always changing, so a foresight team needs to be ready to change their plans when required. They should be prepared to update their ideas and make changes when things don’t go as expected.
Staying involved
Everyone needs to remain engaged in foresight. It’s not something you do once and forget about. It needs commitment from everyone at all levels.
Checking results
It’s important to check how well foresight is working, including keeping track of how well the plans from foresight are being put into action and how they’re helping the organization.
Tools
Many tools can help with foresight, like software for visualizing data, spotting trends, and planning scenarios.
Strategic foresight is about shaping the future, not just responding to it. It is a vital tool for any organization or government that wants to be future-ready. There’s no crystal ball to see the future, but we can have a compass to navigate it.
It’s about making better decisions today based on a deeper understanding of what tomorrow might bring. And in a world that’s changing faster than ever, resilience and readiness can spell the difference between an organization’s evolution or extinction.
