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What is strategic foresight and why is it important?

Aug 17, 2021 10:29:17 AM

Strategy and related concepts are hard to define, even if the topic has been discussed for decades. Whatever the terminology, every organization should be serious about its understanding of the future.

What is strategy?

The question of ”What is strategy?” has been addressed by dozens of scholars and practitioners. Whatever your definition, the essence of any strategy is about building the future of the company. [1] [2]

Typically, your strategy may be about choosing and building up your own competitive space, or it may about developing skills and competencies hard to copy. Nevertheless, it is still about building the future of your company.

Since strategic foresight is all about future-oriented insights, it should always be considered a key concept of any strategic planning endeavor.

What is strategic foresight?

Strategic foresight is about combining methods of futures work with those of strategic management. It is about understanding upcoming external changes in relation to internal capabilities and drivers.

Instead of trying to be comprehensive, here’s just a brief introduction into how I am today using the terminology when rolling up the sleeves and putting this stuff to practice.

Market foresight is about the consideration of possible and probable futures in the organization’s relevant business environment, and about identifying new opportunities in that space. I prefer market foresight as a phrase over an earlier concept of industry foresight. This is simply because thinking across current industry boundaries is today an important source of innovation.

Strategic foresight is a concept I deem synonymous with corporate foresight. It is about mirroring the possible and potential futures against the understanding of organization-specific capabilities, and those of one’s competitors. Ultimately, strategic foresight is about the strategic choices you make based on this combination of external and internal insight.

How should I organize for market foresight?

Most organizations have an in-depth understanding of their current industry key topics, technology trends, customer expectations, and so on.

However, true market foresight should be based on looking at cross-industry developments, not at the ongoing trends of the current industry only. At least what you might call ‘radical innovation’ rarely emerges from within existing industry boundaries.

Furthermore, foresight work should be based on a combination of external market tracking and organization-specific sense-making. Plain trend reports or similar rarely bring direct value to your business.

Finally, the people involved in your foresight work should include individuals with diverse backgrounds. You should bring in people also from outside your own organization. There are some 8 billion people not working for you, and many of them are pretty smart. More importantly, most of their thinking is not limited by your business or industry legacy.

How to use foresight?

The practices and purposes of foresight work quite naturally depend on the organization in question. Obviously, true foresight can help you in building long-term scenarios and in guiding your strategic targets and road mapping.

Foresight is also about tracking foreseeable changes in buyer sentiment and behavior. Thus, you may identify new opportunities (or risks) even in the short term.

In terms of possible ongoing strategic programs or must-win battles, you may bring in further steering and/or healthy criticism and questioning of their relevance.

Why does strategic foresight matter?

Let me repeat: the essence of any strategy needs to be about building the future of the company. Thus, one can easily identify two overlapping main purposes of strategic foresight.

First, the hardcore management aspect. Established businesses need to be turning the changes in their business environment to their own advantage. Not everything should be about fast-moving or even disruptive new entrants. And that’s certainly where strategic foresight matters.

Second, the leadership aspect. People need a direction to guide their efforts: a somewhat clear picture of what you believe your future environment will be like, and the position you are targeting in that environment, and why. That’s strategic foresight.

In closing

I think systematically working on strategic foresight requires new skills and working methods across all organization levels.

Because whatever the terminology, any organization serious about its strategy and novel ideas should also be serious about a multi-faceted understanding of the future.

After all, in the absence of such understanding, what would your strategic plans be based on?

The post was originally published on March 8th, 2016 in AaltoEE's blog.

Sources

[1] What is strategy? by Michael E. Porter

[2] What is strategy, again? by Andrea Ovans

Photo by Jakob Owens on Unsplash

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