How to predict unpredictable future?

Has your organization been surprised by COVID-19 pandemic? Is your organization ready to anticipate and respond to any changes in the external world? If you are like most of the companies, then let’s face it, the odds are against you. We live in unprecedented times when everything is quicker, the impact is greater, and the pandemic is just one example of it. There are also other known exponential laws governing our present VUCA world (which stands for: volatility, uncertainty, complexity, ambiguity).

Today seems exceptional although the common truth that the only constant thing in our world is change has been with us for a long time. A common saying (wrongfully attibuted to Charles Darwin) reflects the key role of adaptation to evolving environment conditions: it is not the strongest of the species that survives, nor the most intelligent; it is the one that is most adaptable to change. Similarly, the second law of thermodynamics states that everything is falling apart, slowly, therefore staying itself requires energy. The more complex the environment, the more attention and energy is required thus continuous adaptation is the most efficient use of our resources. Yet most of the organizations struggle to take this approach – it seems that the bigger the commitment, the harder it is to change our mind. Consequently, the cost of potential missteps due to our ignorance, overconfidence or just inability to read weak signals is increasing over time when we don’t act upon it. The organizational lifespan is decreasing rapidly as only 12% of companies from the Fortune 500 in 1955 are still on the list in 2020. Currently companies on S&P 500 list stay there for a bit longer than 10 years compared to over 30 years in the last century.  Basically, any company designed for success in the 20th century is doomed to fail in the 21st century.

Despite this knowledge most of the companies act as if the laws of nature or statistics do not apply to them – this is often due to a preferred bias, the most common mistake in foresight. We believe in the good future for us even if most of it is not even probable as the official future, the future that people believe in, is often based on outdated principles, assumptions and mental models. Evidence shows that this expected future happens very rarely. As all of us have biased belief systems that most often we are unaware of, foresight scenarios may function like a mirror, as they help us become aware of our assumptions and belief systems, as well as to confront and expand them. The future is always a story and the objective is to explore the range of possible scenarios preferably not falling into trap of good vs. bad stories. While seeing world as white and black rather than the complex rainbow it actually is, may be convenient it is also unrealistic and such visions of reality are not to be relied upon.

What we know is that tomorrow is shaped by trends that emit weak or strong signals and what is shaping the world today will be losing its impact over time. Seeds of the future are in the present. However traditional planning approach that perceives future as an extension of the present allows us to see just the tips of upcoming icebergs. When we don’t engage in meaningful foresight exercise, we can only spot these icebergs at the last moment, from the very close when the impact is inevitable.

Specific details about successful results of foresight activities are hard to find due to the nature of competition as foresight efforts usually take place behind closed doors. The pioneer in this field – Royal Dutch Shell – has been using diverse foresight methods in their business planning since sixties in the last century. Currently, more and more companies such as BASF, Siemens, Daimler or Philips use corporate foresight to deal with uncertainty and respond to industry changes. Even the Finnish tax administration applies future-oriented methods in order to understand trends impacting the society and therefore adequately adapt its policies.

We all think about the future. Driven by an organizational foresight, we move this process from individual to collective, from unconscious to conscious, and from implicit to explicit in order to spark a meaningful conversation that makes subsequent insights an essential part of the strategy development process. Foresight is an immersive learning experience that is shaping the culture and the vision of an organization by looking at change from a systems perspective and analysing underlying conditions that shape the reality of tomorrow. It is quite impossible to predict what exact brands or products will make it in the future (as it is up to fads, fashion and commerce). Nevertheless, it is quite probable to foresee trends that will primarily affect our organization and we can do it with the right approach. Foresight enables leaders to ask better questions about the future, make strategic choices explicit and support the discovery, design and consideration of more and better options for action. The value of this exercise does not come from reading an end report but rather from engaging with the relevant users. It’s all about using collaboration, unpacking complex matter into components, distinguishing knowns from unknows, analysing outside and inside factors, and then constantly monitoring and adjusting, as constant gradual update is the best way to stay on the track – organizational vision is not something fixed anymore, it is fluent.

And the last thing – the future is not what happens in the future, the only place that future is happening is now. If we wait for the future before we act than it will certainly be too late. So, does your business model look into the future or does it defend the past?

 

Tomasz Królikowski
Associate at Fluent

 

Photo by Drew Beamer on Unsplash