Reading Tea Leaves
In preparing for battle I have always found that plans are useless, but planning is indispensable. - Dwight D. Eisenhower
The recent Karnataka elections have proved at least one thing that forecasting future is a hazardous activity. Similarly, businesses have to plan ahead but are we entering the new world with old tools? Have you started thinking in present for future?
Welcome to the VUCA world. It is Volatile, Uncertain, Complex and Ambiguous. Entry is mandatory. In this world, there are no black & white answer but leaders have to work through dilemmas and trade-offs. Have you planned for scenarios?
We keep hearing that strategic planning and business plans, the traditional pillars of management, are obsolete. The May 25 issue of Knowledge at Wharton goes to the extent of advising burning of business plans. A business plan can be considered as creating a recipe for baking a cake. If you do this and then you do that, the cake will come out okay. It does not fit for all purposes. That’s not how it happens in the VUCA world. Future comes very fast to those who are not alert. What is fringe today becomes mainstream in future. The graveyard is full of tombstones of companies such as Kodak, Blackberry & Nokia, which had a strong belief that the good times would always be there.
In such scenario what is the way forward? We present some food for thought. Professor Bob Johannsen, an early proponent of VUCA phenomenon, in his latest book The New Leadership Literacies, advocates starting from taking a long-term view, a 10-year forecast and moving backward from there. It is like revisiting the hindsight-insight combination from a foresight perspective. Unlike the short-term future where there is a lot of speculation and little data, a long-term future is largely stable. Take the case of electric vehicles (EV). The government of India launched a massive plan to introduce EV in India in 2016, only to withdraw it next year. There is no clarity in the short term that is one to three years, on how many? Which type? Infrastructure required? Type of battery? Recharge life, regulations etc. However, if we look at a decade in the future, the picture is much clearer.
Johansen says “Learn to look backward from the future. The future will reward clarity—but punish certainty. Looking long will help differentiate between the waves of change that can be ridden and those that must be avoided. Judging too soon will be dangerous but deciding too late will be even worse. By looking ten or more years ahead and then coming back, leaders can see the subtle patterns of change that are not visible in the noise present. Use foresight to provoke your insight and your action. There is short-term value to long-term thinking.”
Within this fast-changing future, opportunities will be revealed to those who can separate the Hard Trends from the Soft Trends that might or will happen. As Professor Daniel Burrus explains in his book The Anticipatory Organization, the future is far more certain than we realize and changes still take place much more slowly than we think. For example, a concept like EV has been around for more than a decade and it will still require at least another two decades where these vehicles are a significant threat to existing fuel-based technologies. This gives enough breathing space for vehicle companies and those companies, which supply to these OEMs, to make their transition. The future only looks uncertain and arrives fast because we have not yet developed the mindset and tools to look into the future, which Professor Burrus now introduces.
Usually, a Hard Trend is a projection combining measurable and tangible events that are predictable. This is sufficed with facts, events etc. This is where the future event is bound to occur supported by a fact that cannot be changed, e.g. demographic data such as birth, death, aging etc. is a hard trend. Contrastingly, a Soft Trend is based on projections surrounded by assumptions and probabilities. These may appear as being tangible or as predictable facts.
There must be a clear understanding of the difference between Hard and Soft Trends, allowing us to anticipate on the part of the future deemed fit. Learning on how to analyze the dynamic trends, one can resolve challenges. Opportunities can be visualized, which were almost impossible a few years before. Thus, one can emerge as anticipatory as compared to being reactionary.
Companies that have developed foresight practices are in a better position to face the future with confidence. But what is future-preparedness, and how can it be strengthened? In 1958, the average lifespan of S&P 500 companies was 61 years. Today, it is 18 years. Apparently, today’s companies often fail to adapt to the changes in their competitive landscape. Satya Nadella, CEO of Microsoft says that “Microsoft faces existential threat every 5 years, still, we're here.”
Therefore, to plan for the future, where hard data is not available, strategic foresight requires that the incumbent develop multiple futures. By imagining multiple destinies and working back to the present, companies can be preparing for the future. As more hard data becomes available and as clarity starts to emerge, options for navigating a particular path emerges.
The core problem with the strategic planning is that it is based on the company’s mission, resources, core competencies and competitors as evinced from a traditional thought in the late 1950’s. Do you really think that this can forecast the future as in the past? It is surely rare!
Revolution in digital technology is exponentially driving change. Organisations should assess and analyze the impacts of assorted variables, examine the potential influence and then determine the course one intends to pursue. At the same time, one will have to hone the agility & resilience for pivoting the journey. Thus, planning must be drawn from the future.
Kodak continued to live on body fat accumulated over decades. Its closest rival, Fuji Films looked beyond its own industry boundaries envisioning future. It anticipated various futures and within a decade has moved to new businesses. Kodak, on the contrary, has gone into oblivion.
Alvin Toffler, in his book Future Shock, forecasted many changes which, 40 years after the publication of the book are coming true (not all predictions came true). He was not an oracle but was looking at green shoots or listening to weak signals which eluded the rest of us.
There are two things we can say with certainty about the future: it will be different, and it will be full of surprises. This will nudge you to question your assumptions, beliefs, and attitude. The source of economic wealth will be less in the production of material goods but will increase towards the creation and manipulation of information, knowledge, and ideas. This will be the new world. We start by first exploring how we think about the future, looking at ambiguity and uncertainty.
Since we cannot forecast the future and the future can evolve in several directions, foresight provides a window to explore, which possible scenarios are possible that are probable, and from that, we can draw a strategic perspective as to what we can best influence. It’s a case of keeping your eyes peeled for early warning signs, of which trends, are bringing any of the various futures closer.
This requires a reorientation of the role of learning in organizations. Foresight work should always be co-created by actively involving different stakeholders to ensure that diverse perspectives are debated and a mutually shared future vision can be created. This can be done by promoting leadership literacies as all levels in the organization, from management trainee to the CEO.
The following model developed by co-authors Suhayl Abidi and Manoj Joshi is an attempt to show the various learning flows within the organization, which is anticipating and responding to external change as explained in their second book titled, The VUCA Learner.
VUCA represents the dynamic business environment in which the organization is anchored by The VUCA Prime, four interventions as described by Professor Bob Johansen to amplify or dampen the effects of VUCA. These act as anchors which bring stability to the organization in times of great change. People within the organization identify “early or weak signals” which have the possibility to threaten the organization or provide an opportunity for growth. These forces are studied by groups within the organization and insights presented to the management.
Volatile vs. Vision – Foresight exercise forces us to align our vision with the desired results and provide guideposts to reach there.
Uncertainty vs. Understanding – Invest in information gathering, interpretation, and sharing. Look for facts wherever possible, though data analytics and other tools.
Complexity vs. Clarity – Identification and understanding “weak signals” make it possible to make sense of the world around us.
Ambiguity vs. Agility – Experiment, prototype fast and fail fast to test strategies for the various futures envisioned.
Thus, the CEO’s and senior leaders must debate the understanding on insights with the help of Foresight groups that are engaged in creating multiple scenarios of the future, often providing feedback, further helping finetune the outcomes.
* Dr Joshi is also the contributor of this piece - Dr. Manoj Joshi is a Fellow Institution of Engineers, Professor of Strategy, Director, Centre for VUCA Studies, Amity University, with 26+ years of experience in industry & research. He has authored 40+ articles, co-authored two books “The VUCA Company”, “The VUCA Learner” and is also on the Editorial Board of several international refereed Journals.
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