Industry Volatility
Historical stability provides no guide to the future.
Whilst knowledge of the future is limited, we do know that trends don’t last and change is inevitable.
Times of industry stability provide the best opportunity to plan for future disruption.
Foresight-ful companies are always on the lookout for future change:
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They have an extended planning horizon - They look out further than their competitors.
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All change, no matter how disruptive, is preceded by weaker signals or earlier events. Extending your planning horizon enables you to detect signals of change earlier.
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They embed scenario planning into their business - They are sensitive to weak signals of change.
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Scenarios provide a future context through which you can detect and interpret signals of change as they occur, and before they become trends.
These practices allow the additional time to turn threats into opportunities and reduce perceptions of industry volatility.
Foresight-ful companies know that whilst change is inevitable, disruption doesn't have to be.
Companies with long lead times tend to have longer planning horizons by necessity.
So why do they continue to be surprised by change?
All change, no matter how sudden it seems, is preceded by weaker signals or earlier events.
To reduce perceptions of industry volatility you need to detect and attach relevance to these weak signals earlier.
This can be achieved by embedding scenario planning into your business.
Scenarios provide a future context through which you can detect and interpret signals of change as they occur, and before they become trends.
This additional time allows you to turn threats into opportunities and reduces perceptions of industry volatility.
Whilst change is inevitable, disruption doesn't have to be.
Perceptions of volatility are often related to your ability to respond.
An effective way to reduce volatility for your business is to extend your planning horizon.
Extending your planning horizon will naturally increase your awareness and sensitivity to more signals of future change. It will also broaden your perspective of possible future strategies.
All change, no matter how sudden it seems, is preceded by weaker signals or earlier events. With a reduced planning horizon these signals are rarely detected until it's too late.
Increasing your planning horizon enables you to detect signals of change earlier, allowing the additional time to turn threats into opportunities, and reducing perceptions of industry volatility.
Whilst change is inevitable, disruption doesn't have to be.
Industry Competition
Social change drives future industry change.
An effective approach to monitoring future competition, whether it is new competitors or new technology, is to monitor changes in society.
Many companies make the mistake of focusing their research almost exclusively within their industry. This industry myopia sets a business up to be surprised by future change.
Since every industry exists within the context set by society, companies can overcome industry myopia by increasing the proportion of their research that is dedicated to understanding social change.
If industry dynamics are being challenged by a growing number of competitors, your challenge is to develop a unique and superior view of your industry’s future.
The reliance on mainstream sources of information has led to the absurd situation where many competitors receive the same data, from the same suppliers, on the same day! The only winners in this scenario are the suppliers of the syndicated information.
Since change emerges from the fringes, companies are advised to develop and cultivate an external network of people who see the world and your industry’s future differently.
Incorporating this network into your formal planning processes will provide perceptions of the future that differ from those internally, and from those of your competitors.
This leading edge approach to seeing the future will separate your business from the pack.
Success in competitive industries can be achieved with a unique and superior perception of your industry’s future.
The reliance on mainstream sources of information has led to the absurd situation where many competitors receive the same data, from the same suppliers, on the same day! The only winners in this scenario are the suppliers of the syndicated information.
Companies can improve their competitive performance by reviewing their information sources:
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Change develops from the fringes - Develop a network of external people who see the world and your industry’s future differently. Incorporate this network into your formal planning processes.
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Every industry exists within the context set by society - Overcome industry myopia by increasing the proportion of your research that is dedicated to understanding social change.
Planning Horizon
No matter the industry, short planning horizons leave your business vulnerable to disruptive change.
All change, no matter how disruptive, is preceded by weaker signals or earlier events. The longer your planning horizon, the greater your opportunity to detect and respond to these signals earlier.
However, as your planning horizon extends, so too does the future uncertainty.
Scenario planning is the most effective method for dealing with this uncertainty - it is essential to improving your long term strategy.
Scenarios provide your organisation with the following competitive advantages:
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A long-term framework to guide and give consistency to your planning and innovation.
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A future context that allows you to anticipate, detect and make sense of weak signals before they become trends.
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An internally developed and unique perspective of your industry’s future.
All companies can benefit from extending their planning horizon.
The shorter your planning horizon the more prone your company is to disruptive change.
However, as your planning horizon extends, so too does the future uncertainty.
Scenario planning is the most effective method for dealing with this uncertainty - it is essential to improving your long term strategy.
Scenarios provide your organisation with the following competitive advantages:
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A long-term framework to inform and give consistency to your planning and innovation.
-
A future context that allows you to anticipate, detect and make sense of weak signals before they become trends.
-
An internally developed and unique perspective of your industry’s future.
As your planning horizon extends, so too does the future uncertainty.
Scenario planning is the most effective method for dealing with this uncertainty - it is essential for improving your long term strategy.
Scenarios provide your organisation with the following competitive advantages:
-
A long-term framework to inform and give consistency to your planning and innovation.
-
A future context that allows you to anticipate, detect and make sense of weak signals before they become trends.
-
An internally developed and unique perspective of your industry’s future.
Sensitivity to Change
During the established phase of the change cycle the trend has become mainstream - any opportunity to take advantage of society’s changing behaviour has gone.
The 1st step to improving your sensitivity to change is to extend your planning horizon.
The 2nd step is to detect relevance and significance in events before they become trends. To do this, you need to be sensitive to their future significance.
This requires a future context - future scenarios.
Without a future context, signals can appear as random and unrelated, and lacking in any pattern - until the trend becomes obvious for all to see.
By providing a future context, scenarios allow you to anticipate and assess changes as they occur, increasing your organisation’s sensitivity to change.
Detecting change during the emerging phase offers little competitive advantage.
During the emerging stage consumer adoption of new behaviour is rapid and obvious - more foresight-ful competitors have already beaten you to the punch!
To move from responding to trends, to anticipating change, you need to be sensitive to subtle signals as they occur. To do this you need to be sensitive to their future significance.
This requires a future context - future scenarios.
Without a future context, signals can appear as random and unrelated, and lacking in any pattern - until the trend becomes obvious for all to see.
By providing a future context, scenarios allow you to anticipate and assess changes as they occur, increasing your organisation’s sensitivity to change.
Detecting embryonic change - future issues and trends that are yet to emerge - is a key to future competitive advantage.
Companies that are sensitive to early signals of change have the benefit of time to position themselves for their optimal strategic and innovation response.
To detect the relevance of subtle changes as they occur and before they become trends, you need to be sensitive to their future significance.
This requires a future context - future scenarios.
Without a future context, signals can appear as random and unrelated, and lacking in any pattern - until the trend becomes obvious for all to see.
By providing a future context, scenarios allow you to anticipate and assess changes as they occur, increasing your organisation’s sensitivity to change.
Responsiveness to Change
Your responsiveness to change can be improved with 3 effective steps:
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Extending your planning horizon to detect signals of change earlier;
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Embedding scenario planning to provide a future context in which to interpret the future significance of events as they occur and before they become trends; and
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Including backcasting as part of your scenario process…
Successful innovation is as much about timing as it is about the product or service itself - it is just as ineffective to be too early to market, as it is to be too late!
The foresight process that improves innovation timing is backcasting.
Backcasting works back from your future scenarios, outlining the key events and developments that are necessary for your scenario to come to fruition.
In doing so, backcasting provides a virtual timeline for future decision making.
This process not only increases your sensitivity to change, overcoming the element of future surprise, it also provides the signposts for activating future plans and innovation.
The greatest strategic advantage any organisation can have is the ability to foresee and position itself for the development of an embryonic issue into an emerging trend.
Successful innovation is as much about timing as it is about the product or service itself - it is just as ineffective to be too early to market, as it is to be too late!
The foresight process that improves innovation timing is backcasting.
Backcasting works back from your future scenarios, outlining the key events and developments that are necessary for your scenario to come to fruition.
In doing so, backcasting provides a virtual timeline for future decision making.
This process not only increases your sensitivity to change, overcoming the element of future surprise, it also provides the signposts for activating future plans and innovation.
To maintain a position of market leadership it is important to recognise the significant role that backcasting can play in future innovation development and timing.
Successful innovation is as much about timing as it is about the product or service itself - it is just as ineffective to be too early to market, as it is to be too late!
The foresight process that improves innovation timing is backcasting.
Backcasting works back from your future scenarios, outlining the key events and developments that are necessary for your scenario to come to fruition.
In doing so, backcasting provides a virtual timeline for future decision making.
This process not only increases your sensitivity to change, overcoming the element of future surprise, it also provides the signposts for activating future plans and innovation.
Information Sources
If your business is consistently disrupted by unforeseen change, here is a checklist for improving your information sources:
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Change develops from the fringes - Develop a network of external people who see the world and your industry’s future differently. Incorporate this network into your formal planning processes.
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Every industry exists within the context set by society - Overcome industry myopia by increasing the proportion of your research that is dedicated to understanding social change.
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Focus on knowing the internal business mindset…
Over the past 20 years corporations have been in the midst of an information age - an age of accumulating external data in the belief that additional information about the past will unlock insight into the future.
To improve business foresight, the next corporate age must focus on internal information as opposed to external information.
Almost all errors in thinking are errors in perception, NOT errors in logic - and no amount of logic can overcome faulty perception.
Correcting faulty perception is the goal of corporate foresight - it is the key to improving future business performance!
Undertaking structured strategic conversations that unlock the corporate mindset – the assumptions, the biases and the blind spots – is the key to improving your perception of the future.
The result will be an internally generated, unique and superior perception of tomorrow to guide your future strategy and innovation.
This is the next frontier in business planning!
Over the past 20 years corporations have been in the midst of an information age - an age of accumulating external data in the belief that additional information about the past will unlock insight into the future.
To improve business foresight, the next corporate age must focus on internal information as opposed to external information.
Almost all errors in thinking are errors in perception, NOT errors in logic - and no amount of logic can overcome faulty perception.
Correcting faulty perception is the goal of corporate foresight - it is the key to improving future business performance!
Undertaking structured strategic conversations that unlock the corporate mindset – the assumptions, the biases and the blind spots – is the key to improving your perception of the future.
The result will be an internally generated, unique and superior perception of tomorrow to guide your future strategy and innovation.
This is the next frontier in business planning!
The most effective approach to improving your perception of the future is to facilitate internal strategic conversations that bring out into the open your business mindset.
Whereas the current business focus is on gathering more and more external information, the next corporate age will focus on internal information to improve business foresight.
Almost all errors in thinking are errors in perception, NOT errors in logic - and no amount of logic can overcome faulty perception.
Correcting faulty perception is the goal of corporate foresight - it is the key to improving future business performance!
Undertaking structured strategic conversations that unlock the corporate mindset – the assumptions, the biases and the blind spots – is the key to improving your perception of the future.
The result will be an internally generated, unique and superior perception of tomorrow to guide your future strategy and innovation.
This is the next frontier in business planning!