Strategic thinking involves thinking imaginatively about the future. It enables the strategist(s) to articulate answers to two questions,”What are the things that might happen in the future? And, what is the realistic future state that I desire?
Richard Slaughter defines strategic foresight:
Strategic foresight is the ability to create and maintain a high-quality, coherent and functional forward view and to use the insights arising in organizationally useful ways. It represents a fusion of futures methods with those of strategic management.
Strategic foresight is a sub-discipline of strategic thinking, and it can help you develop answers to those two questions. Strategic foresight not crystal ball gazing (prediction), it is about discerning factors that create the future and describing alternate futures. Why? The purpose is practical: generate insights about the future so that the strategist can make better present-day choices.
There are four broad categories of futures, the 4Ps: they are the possible, plausible, probable, and preferred futures. (There is a 5th P, potential futures, where the strategist applies unbounded imagination and extends the vision into realms that are best termed fantasy.) Ideally, we approach the 4Ps in the order suggested in the nearby graphic.
The strategist should begin with the possible future with the goal of developing a broad understanding of the situation. Now is the time to consider “wild card” scenarios or “black swan” events. Divergent thinking (as opposed to convergent thinking) and an expeditionary mindset are appropriate styles of thinking.
- Questions to Ask: What is the most radically-different unbounded future that I can imagine? What is the best and the worst case? What is strange, weird, and crazy? Might it happen?
- Answer to Expect: Yes, the scenario might happen.
Next, she narrows into plausible future states (those which are “seemingly or apparently valid, likely, or acceptable; credible”). Convergent thinking is used. An important idea for this is to consider the “narrative arc” of the organization or situation.
- Questions to Ask: Which future states are feasible, given what we know at present? What would have to happen for this state to arise? How does this future state mesh with the founding mission of the organization and the values of the founders and other stakeholders? Could it happen?
- Answer to Expect: Yes, the scenario is plausible.
The third of the 4Ps is the probable future. The strategic thinker is getting increasingly more analytical and applying systems thinking (being systematic in thinking is one of the four qualities of strategic thinking). Here, she considers causal factors, delays, and weighting for the contribution of the causal factors to the emerging outcome.
- Questions to Ask: Which events (that would cause this future) are is most likely? What other events need to happen, too? Where can we get data to support our assumptions? How likely is this future to happen?
- Answer to Expect: We have a systematic understanding of what would cause each scenario, and an estimate of the probabilities.
The fourth P is the preferred future state. We can influence our future. We can find the performance gaps and create strategic initiatives to close the gap.
- Questions to Ask: What future do I prefer? What choices should I make about scope, objectives, and advantage? (See this article for more on those three elements.) What do I want to happen?
- Answer to Expect: This is the scenario that most fits my ambitions and expectations.
Cautions About the Preferred Future
The flow of attention described – possible to plausible to probable to preferred futures – is an ideal. It’s difficult to practice because it starts with imaginative and ambiguous scenarios.
It’s easier for people to start with stating a preferred future. However, that is problematic because the alternatives are feasible and occasionally do occur. You can’t be proactive if haven’t considered the future that you are pro-acting to. As difficult as it may seem, the strategic thinker will consider alternative futures.
In those organizations that have established and mature process, people often hold unexamined assumptions is that the future will resemble the present. This is a status quo bias, and we see the results continually in firms that have been unable to respond to technology or social trends: film-based photography, newspapers, and bricks-and-mortar retailers of videocassettes to name just a few.
Aspirational visioning is common. Consider a large publically-traded company in agribusiness, a very mature business. The CEO had seen a presentation on Red Ocean Blue Ocean strategy (The blue ocean is a new wide-open market where you don’t have to fight it out with competitors). He challenged the Presidents of all of his business units to grow substantially in the next five years. People made some attempts to dream big ideas, but it the goal was soon forgotten as day-to-day operations reasserted their priority. Masked by the “great recession,” the company missed signals that its markets were fundamentally changing. The company ultimately shrank in size!
When managers move quickly to the preferred future, they often make the mistake of confusing the goal for a strategy. Note what UCLA’s Richard Rumelt says about this in his book, Good Strategy/Bad Strategy. He writes,
“Executives who complain about execution problems have usually confused strategy with goal setting. When the “strategy process is basically a game of setting performance goals – so much market share and so much profit, so many students graduating high schools, so many visitors to the museum – then there remains a yawning gap between these ambitions and action. Strategy is about how an organization will move forward. Doing strategy is figuring out how to advance the organization’s interests. Of course, a leader can set goals and delegate to others the job of figuring out what to do. But that is not strategy. If that is how the organization runs, let’s skip the spin and be honest – call it goal setting.”
By examining the futures in the more rigorous way espoused here – possible, plausible, probable, and then preferred – the strategist increases the likelihood that they are considering real organizational issues that deserve attention and resources. Too, the act of generating alternatives increases the prospects of finding the insights that are necessary for a brilliant strategy. As practical advice, consider increasing the amount of effort in strategic foresight, and then distributing your time in this way:
- Possible Futures – 15%
- Plausible and Probable Futures – 60%
- Preferred Futures – 25%
You should iterate through versions of the plausible and probable futures. You might want to occasionally relook the possible futures to see if they might be better categorized as plausible so as to avoid a blind spot. Too, revisiting the possible futures might cause you to see a strategic driver in a new way.
Remember that the definition of strategic thinking is not simply about imaging a future, it is doing with the intent of being better off in the future. Although this could be dismissed as “just a creative exercise,” it has the potential of sparking important creative insights necessary for building a good strategy.
How have you applied the 4Ps to your development of strategy?