Three Healthy Practices for Enhancing Strategic Foresight

Strategic Risk Probability Impact GraphBy definition, strategic thinking is concerned about success in the future. It is a style of thinking that imaginative AND systematic.  As contrasted with reading palms or charting the movement of the Zodiac constellations, strategic thinkers look to rational methods that fall in the discipline of “futures” or “strategic foresight.” The goal of the strategic thinker is to develop insights and design strategy that recognizes that the future cannot be predicted.

I tell audiences that leaders must prepare for multiple potential futures, enabling them to adjust faster to rapidly changing geopolitical, economic, regulatory and technical developments. Envisioning such possible futures and determining how to best meet those requirements can help leaders create a more agile and responsive set of strategic capabilities. To create a more agile and change-capable organization, you should focus your efforts on becoming “futures-ready.” Here are three healthy practices that can assist you in developing a robust perspective future:

Healthy Practice #1: Be Skeptical of Vision Statements

Visioning is an exercise to develop perspective and dialogue about the future, not a “locked in” objective. Many vision statements assume that the future will look a lot like the past. In this case, vision becomes the sole hypothesis about what will happen. It becomes a prediction. This single-hypothesis assumption, in a nutshell, is the difference between long-range planning and strategic planning.

Healthy Practice #2: Use Risk and Opportunity Analysis as Inputs

Most organizations spend some time with formal risk assessment, resulting in a list of “things to watch for and manage.” Although many times the risk analysis seems to be more of a litany of standard problems, I find that the effort could be used to create a greater awareness of the future.  After all, isn’t the risk analysis simply recognizing that there is a cause-effect relationship between a risk event and its consequence?

Healthy Practice #3: Imagine the Best Case and Worst Case Scenarios

Since no one can anticipate the future with certainty, it’s wise to consider scenarios. What is the best that could happen to you? What is the worst?

This is just a few of many healthy practices for developing a strategic foresight. How have you used them? What other practices do you suggest?

How to Use the 4Ps to Capture Future Scenarios: Thinking Strategically

How to Capture The Future

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?

Strategic Foresight

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.

The 4Ps

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.Strategic Thinking Definition

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?

How to Develop Strategic Insights

christopher columbus strategic thinker

Strategic thinking involves thinking about the future in a purposeful kind of way; that is, to generate useful insights that guide present-day choices. Presently, data analytics and statistical forecasting is popular, but I want to focus on generating insights, which usually come to the individual subconsciously.


Christopher Columbus: Strategic Thinker

Let’s imagine ourselves shadowing Christopher Columbus prior to 1492. As a naturally curious person, he gained knowledge for winds and currents and seamanship from his experiences sailing the Mediterranean, North Atlantic, and West Africa.  He read many books on astronomy, geography, and history and made hundreds of marginal notations in them. He  collected and interpreted data in the light of his personal ambitions.

History tell us little about Columbus’s reasoning. Regardless of the historical record, at some point in time Columbus developed the insight that he could use the Easterlies (trade winds off the coast of Africa that move from East to West) to sail westward, and then return to Europe via the Westerlies.

Christopher Columbus was a strategic thinker who took an abstract and unproven idea and proved it was true.

Andy Grove’s Strategic Decision

Consider Intel chairman Andy Grove’s story of how he came up with an important business strategy.  Attending a management seminar, Grove heard the story of how fledgling “mini-mills” in the steel industry began in the 1970s to offer a low-end product—inexpensive concrete-reinforcing bars known as rebar that subsequently gave them the entry to dominate the industry once dominated by integrated steel makers like U.S. Steel.  Grove saw that Intel was sitting in a similar situation: its dominance of its industry could be disrupted by allowing niche players in its industry to take the low-end part of the market.

“If we lose the low end today,” Grove realized, “we could lose the high end tomorrow.”  At Groves’ insistence, Intel redoubled its efforts to develop and market the low-end “Celeron processor” for the emerging personal computer market.

Openness to Fringe Data and Dissent

Grove had an abundance of data from Intel about its production, its production plans, market demand, and profitability of Intel’s various product lines. He and his team easily could have used that data to frame its strategic plans.  Indeed, that is very common for strategy setting by most firms.

Grove used analogy in his reasoning process: How is “A” like “B?” or “How are chips like steel?” One answer is that they are similar in that both have low-margin commodity-like grades and high-value engineered grades.

The insight is particularly remarkable in that Grove considered data from outside his industry.

Indeed, I meet many managers who say something like “Our industry is unique” when in reality there are more commonalities than differences. The statement, “we’re unique” establishes an excuse for close-mindedness and learning. They fall into a trap of where their belief system causes them to filter out contradictory information.

The openness to new ideas – from anywhere – reveals new explanations and possibilities.  Strategic thinking incorporates much of the characteristics of creative thinking; for example, both make considerable use analogies.

Strategic thinking is different because of its emphasis on the future and on success, particularly in the crafting of strategies that give the strategist an advantage over others.

Insights – Start With These Four Questions 

In my experience, insights come from posing and answering questions. 

When thinking about the future, it is useful to consider the answers to these four questions:

  • What data and evidence about the past, present, and future do I choose to consider (and to ignore)?
  • What seems to be happening?
  • What is really happening?
  • What might happen?

Strategists employ strategic thinking to generate about the future, but taking the context of the present and the past into consideration. How can you use strategic foresight to enhance your strategic thinking capability?