Foresight and importance of foresight methods in business
If the past few years have taught us anything, it's that life and the world of business can be very unpredictable. In a world of BANI (brittle, anxious, non-linear, and incomprehensible), the future may seem clouded. When unexpected events happen, they can adversely affect society and businesses. Although the nature of these events can vary, it is absolutely essential to have a plan in place.
This is where foresight methods and strategic planning come into play. When thinking about foresight in a business setting, we are not trying to predict the future itself. However, what we are trying to do is to use foresight framework and use its inputs to formulate and guide the business strategies for the future. We will also look at how futures thinking and strategic foresight helps businesses plan for the future, innovate and create a more resilient future - taking control of their own future!
What is a foresight methodology?
We can define the word 'foresight' as the ability to gather and process information about the possible future operating environment. It is often an unconscious process in human beings. In organisations, foresight is vital to effective planning as it allows the business to anticipate change.
We define methodology as systems for teaching, doing, or studying something. In terms of foresight methodology, it is an operational framework that can be used to see patterns in data more clearly. Therefore, we can say that foresight methodologies are frameworks that allow us to analyse data that structure our thinking about future events.
How can good foresight help businesses?
Understanding the world around us and being able to predict how changes might affect the organization, can provide immense advantages and business opportunities. By implementing successful business foresight, organisations can prepare for change and build strategies to cope with it.
If an organisation is able to integrate foresight methods into its everyday processes, it can protect itself from adverse events and give it a direction to move forward within its markets. For example, fruitful thinking can lead to the identification of gaps in the company's knowledge. By asking questions about a product or market's future development, organisations can see where they lack knowledge. This can prompt them to carry out additional research, which can lead to better products and marketing.
Foresight leads to innovation
Another way in which foresight and futures thinking can help an organisation is that it can highlight areas where the company can grow. By predicting the way the product or market might develop, organisations can change their products to fit future requirements.
We can divide strategic methods into four stages according to A Generic Foresight Process Framework (Voros 2003):
- Input methods and strategic intelligence: What is going on?
- Foresight work and analysis: What seems to be happening, interpretation of what’s really happening, and prospection on “what might happen?”
- Outputs: What might we need to do?
- Strategy: Strategy development and strategic planning
This model indicates that foresight work precedes both strategic decision-making and strategic planning. Many organisations already adopt traditional strategy processes by gathering input, analysing and interpreting it.
However, work carried out in the foresight phase is often not done correctly. Only by adding this phase and sustaining it will there be improvements in organisations.
Many businesses depend on innovation to keep moving their businesses forward and to increase their market share. However, in order to innovate, they must understand and predict what their customers want to buy now and in the future. Therefore, they need to have excellent insight and foresight in their customer base.
Organisations use insight to understand how their customers perceive new products and services. With the help of foresight tools, such as trend analysis and implication mapping, organisations can prepare for the possible changes in for example consumer behaviour. Some examples of the latest developments are for example changing narratives on how people construct their adult lives and what kind of products and services they consume - tailored groceries, the rise in the consumption of plant-based products and sober curious movement to name a few.
What is strategic planning?
The example of new innovative products and services that respond to the changing consumer needs, demonstrates how strategic planning emerges from future thinking. By using foresight methods to analyse future trends, organisations can create and implement strategic plans. In fact, the use of such strategies allows them to move organisations in different directions over a period of years.
This strategy can involve big changes within an organisation. Sometimes departments or entire companies need to be restructured. This can be a painful process and requires sensitive change management. By employing effective change management strategies, companies can make the process of change less stressful for their employees and, ultimately, build a stronger organisation.
Strategic planning is vital in our ever-changing world. Companies need to anticipate changes and adapt to them. If a comprehensive strategic plan is laid out, it allows the company to define measurable goals. This, in turn, gives them a way of measuring their progress and assessing how well the plans are working. By continually assessing their plans, they can make rapid changes if needed.
Exploring the future can prove invaluable in the business world. The ability to anticipate what your customers want can make the difference between success and failure. Many companies over the years have lost their market share and competitive advantage because they have not been able to innovate, or they have missed a trend by mistake (making a conscious decision not to follow a trend is part of strategic planning). Therefore, it is vital that companies utilize systematic corporate foresight and strategic planning methods.
Organizations can benefit from creating a process of foresight thinking, which leads to strategic planning. By building futures thinking practices into their day-to-day management, they can maximise the potential of understanding the world around them and how they can adapt to change.
Futurice specializes in Foresight and Future Thinking methods and helps companies to plan, execute and build resilient futures. We help companies to ramp up their capabilities for taking control of their future!
- Annina AntinrantaPrincipal Designer - Emerging Business