Clarity Tip Sheet...

Itís difficult to predict - particularly about the future

Itís been said that itís difficult to predict, particularly about the future. The world is changing so rapidly, in so many ways that it seems almost impossible to envisage one future.

Thatís why scenario building can be a good approach to preparing for the future.

Extrapolating the present
Some companies admit defeat when it comes to keeping up with developments. They lull themselves into sleep and vehemently assert that the world will continue to need their products for many years to come and that no truly useful alternatives will arrive.

Usually, such a standpoint is catastrophic, and such companies mostly die out in a few years.

Almost as quick to disappear are companies that, whilst they realise that changes happen, fail to see the complete picture because they work merely on the basis of extrapolating current developments.

Such companies take long-term strategic decisions based on a very shaky basis and they often risk being swiftly overtaken by other companies who had geared up themselves to another future - and consequently seen drastic changes as an opportunity.

Why strategic planning is not a waste of time
Many claim that strategic planning is now a waste of time. Developments and change happen at such a pace that itís impossible to predict the future.

Whilst that not untrue, this is exactly why itís important that you work with several images of the future - future scenarios.

By having thought about possible future situations, you stand a better chance taking wise strategic decisions which exploit opportunities and get round obstacles and threats.

This is exactly the main line of reasoning in future scenarios: even though they are interesting to prepare, they are a means, not an end, to strategic planning.

Using long-term vision
When you work with strategic planning, you have to look reasonably far out into the future. Consequently, the future scenarios have to be just as reasonably future oriented.

When future scenario techniques were introduced in the 1970s, they were often used to see some 20 - 25 years ahead, but that is a pointless. Today, itís not reasonable to look forward more than some 5 - 10 years, and often even less is tricky. It takes a lot of knowledge and imagination.

Step one - be creative
There are many ways to work out future scenarios and some are so sophisticated that they are difficult to use in practice.

Whichever way, three main points should be highlighted:

1. Which factors drive the market?
2. How will the market look in XX years?
3. What changes will the market undergo in the process?

The first point is typically the easiest to handle, whilst question 2 and 3 are difficult.

Thatís because, in order to answer question 2 and 3 and not merely extrapolate the present, you have to think outside the box. Equally, it takes recognition that there is likely to be not just one future, but typically three or four possible futures and that you should describe them all.

Step two Ė ďwhat it means to youĒ
Once you have described a string of future scenarios (based on market drivers) you ask yourself: ďwhat will this change process and the end result mean to our company?Ē

That is, for every scenario, you develop a set of objectives and strategies. Naturally, this strategy should be sufficiently flexible so that minor adjustments can be made to accommodate all the future scenarios.

Although that may look like a tough requirement, itís a crucial one. Only companies that can quickly and effectively adapt to new developments will survive in the longer run. And change management is unquestionably easier when you have anticipated changes - and prepared for them.

Pulling it all together
This process does not have to be as complicated and time demanding as it may seem.

You can get very far by...

1. Collecting, processing and publishing all current knowledge about customers, competitors, markets, technologies, etc., so that your company has a common platform to use.
2. Call a workshop with a broad representation of team members and, hugely important, outside ďprovocateursĒ that have a different (fresh) view on things
3. In the workshop, you apply a creative process (using Mind Mapping, for instance) with a number of what-if questions to move away from the now
4. After many discussions, describe three or four of the most relevant (not necessarily the most realistic) future scenarios in words and pictures.

Once the workshop has been concluded, and the future scenarios have been described, itís time to develop the strategy.

When doing that, for each scenario consider...

1. What would our current competitors do if the scenario came true?
2. Would new competitors emerge Ė perhaps from an unexpected angle Ė and what would they do?

When these questions have been answered, itís time for strategic planning.

In principle, you can do this as you usually do, but itís worth reiterating that your strategy is flexible enough to have room for all outlined future scenarios and expectations of competitor behaviour.

Future scenarios beat astrology
Just as some companies use an astrologist when they recruiting new team members, they could of course ask their astrologist about how the future will turn out - but companies with a more straight-thinking approach would be wiser to forget about astrologists, crystal balls, tea-leaves, etc.

Itís equally impractical to use only the rear view mirror, because you canít realistically form an outlook only on the basis of the past.

Whichever way, whether you like or not, you have to contemplate the future Ė otherwise youíll soon be a thing of the past!

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