Anticipating Credible Futures

Traditional management literature tells us that business success is informed by sound planning and forecasting. Arguably, the 1970s and 1980s where the golden era of this paradigm. Large corporate behemoths, especially in Europe or Japan, were not shying away from making ten, fifteen or even twenty-year strategic plans.

But the zeitgeist slowly, then abruptly, shifted.

The emergence of the change can be traced to Henry Mintzberg’s classic 1994 book “The Rise and Fall of Strategic Planning”, in which he produced a body of evidence highlighting the fact that managers consistently overestimate their ability to predict the future, as well as to plan for it rationally. So long for the ten-year strategic plan.

A few years later, in the early 2000s, the idea that the pace of change is accelerating exponentially begun to permeate business circles, starting with the Silicon Valley.

In the words of the star futurist Ray Kurzweil, in his 2001 essay The laws of accelerating return: “An analysis of the history of technology shows that technological change is exponential, contrary to the common-sense, intuitive, linear view. So we won’t experience 100 years of progress in the 21st century — it will be more like 20,000 years of progress (at today’s rate).”

With change happening so fast, how can you plan ahead?

From trying to plan everything, business leaders switched to believing that any attempt at forecasting the future was futile. This new false modesty [1] is at the root of the Silicon Valley “go fast and break things” mentality.

A recent conversation with an ex-colleague, who had left Claro to work at Google, vividly illustrated that point. Asked what surprised her most about the Google culture, she said one single element stood out: the lack of strategic planning.

Sensing my disbelief, she explained that Google’s philosophy is that trying to forecast the future is unproductive: the only way to succeed is to try, fail, iterate, and try again. This might be possible when you’re Google: with virtually unlimited funds, you can have hundreds of teams working in parallel on different hypotheses, then select and combine the experiments that work best, prune the others, iterate and so on. Though arguably, even if you are Google, this method is far from efficient: at a macro level Alphabet so far failed at pretty much everything beyond advertising based business models. [2]

At Claro we’re convinced that this modern assumption – the idea that the pace of change is now such that forecasting is useless – is plain wrong. Even more so, we believe the increased pace of change requires companies to invest more, not less, in understanding how they can become future-proof.

As we recently worked on several such projects, we articulated our thinking on the topic around an offer we call “anticipating credible futures”.

It’s based on four key assumptions:

1. Anticipating credible futures is a thinking tool, not an end in itself

Predicting the future is indeed impossible. Yet it is the very process of imagining what the future could plausibly be that holds inherent virtues.

Trying to paint a credible future is a forcing mechanism to develop a coherent systemic view of a company’s business context, and how it might evolve.

What are the trends most affecting a given company? How and why are they creating change? How do they interact? What are different tipping points which could push the environment one way or another?

2. While the environment is changing fast, people’s fundamental needs remain the same

Credible futures are also powerful tools to help business executives project themselves in the future context of their customers.

Most innovations fail because of a lack of product-market fit. Said differently, business executives are dramatically overestimating their ability to identify real existing customer needs.

At Claro we believe the answer to this problem is to embed oneself in the life of people, to move from a theoretical understanding to a practical, grounded, one. To do this for existing needs, we rely on ethnographic research. Doing this for future needs is more challenging, but it’s possible. It requires painting a plausible, concrete, future, and extrapolating how core human needs will express themselves in it.

What new frustrations, or tensions will arise? And hence what problems and use cases will be worth solving?

3. To be beneficial, long-term strategic plans must be flexible

The environment in which companies operate is increasingly complex and volatile. In this context, business anticipation needs to happen within a flexible framework.

Its purpose is not to lay out a complete, precise and rigid strategic plan for the company – that would be futile and counterproductive.

In the words of Mintzberg “sometimes strategies must be left as broad visions, not precisely articulated, to adapt to a changing environment”.

Most importantly, this has an essential impact on organisational design: flexible strategies need to be supported by organisations that can adapt to change. Those organisations will more likely than not be horizontal, resilient, and above all foster a culture of autonomy in alignment.

4. In an increasingly complex environment, to have a “north star” helps taking key decisions

Having adaptable strategies doesn’t mean being erratic and purely reactive. On the contrary, anticipating credible futures enables companies to set their “north stars”: key principles and beliefs to follow in the face of uncertainty [3].

Yet defining these north stars is only the beginning. It’s when they are shared and interiorised by the whole organisation, that they can become powerful tools to align activities, rally troops and foster a strong, coherent, culture.

In a follow-up article we will detail our approach to credible future anticipation, and illustrate the methodology with concrete examples from past projects.

If this topic is important for your company, or you would like to know more about our insights and perspective on anticipating credible futures, please contact us at: hello@claropartners.com

March 25, 2019

 

 

 

[1] An amusing paradox being that while one would expect such philosophy to foster a salutary sense of humility amongst business executives, it does not. While seemingly acknowledging the inherent limits of their intellect, each start-up or tech CEO is equally convinced that his idea is the revolutionary one.

[2] https://www.nytimes.com/2018/04/23/technology/alphabet-google-future.html. On a side note, it is no wonder this shift in mindset also corresponded to the advent of the start-up as a key unit of the economy. Indeed, the start-up ecosystem is built on the premise that each start-up has an infinitesimal chance of success. Yet, as they continuously spawn in droves, the system as a whole is successful.

[3] Behavioural science backs our observations: as famously exposed by Barry Schwartz in the Paradox of Choice, being faced by more than 4 options overwhelms people’s cognitive abilities, which leads them to action paralysis. Surprisingly, while this paradox is well known to marketers (who apply it to customers), it’s used far less in the context of business strategy, and this despite the fact that business executives are faced with choices arguably more complex than picking a bottle of ketchup at the supermarket. If anything else, a nice example of the Dunning-Kruger effect (i.e. people, at all performance levels, are equally poor at estimating their own performance).