Anticipatory Strategy for the VUCA World: Foresight Makes the Difference
Accelerating technological transformation with rising social, political and global uncertainties are combining to create what is potentially an unprecedented scale and pace of change globally and India in particular in a VUCA world. In this context of rapid change and rising uncertainty, companies must seek ways to better anticipate, prepare for, and adapt to the future. Companies must learn to get ahead of events or risk being overtaken by them. This is specifically true for projects where the concept to commissioning may take several years.
In short, turn your strategic planning into an anticipatory mode. Have you done so? If not, do not delay! Let us generate critical thinking with a scientific reasoning.
The uncertain future
The proposal to set up a high-power diesel locomotive plant in India was made by the Railways in September 2006 and GE was awarded the contract in November 2015. The railways will pay GE for assured off-take of 1,000 engines apart from maintenance fee spread over 11 years.
Soon after GE started the construction of the plant in one of backward part of India, it was announced that within five years, the entire Indian railways mainline operations will be electrified. GE was asked to reconsider setting up the plant but since the contract was already awarded and building work started, GE refused accommodation. The outcome became a liability.
A foresight study during the period of negotiations would have shown the futility of this large investment and thrown up warning signals much earlier to inking the irrevocable contract. Why not the institutions undertake Anticipatory studies and Horizon scanning is still a question?
Adani’s Australian Coal Project is “work in progress” for almost a decade. It started around 2008 when price of thermal coal was $130 per tonne, while it is hovering around $60 today.
These two examples illustrate scenarios of large capital investments, which will be amortised over decades, reflecting a poor appreciation of Critical Thinking & Foresight as core disciplines in corporate planning process. Foresight is the process of anticipation that identify opportunities and threats in mid-term to long-term future. Critical thinking is the skill for asking questions. Before you can solve a problem, you must be able to critically analyse and question what is causing it. Both skills are not taught in Business Schools but these can be learnt.
To build an anticipatory infrastructure to take Indian organisations into the 21st century planning & decision-making process require both skills and budgets. Foresight systems which are effective and resilient, consists of information generation and management process. It generally consists of three elements:
The future is not pre-determined or predicable with incomplete information on future, which is never available. Therefore, it makes sense to look for ways to understand the future to deal with uncertainty. All our knowledge is about the past, but the decisions we take is for the future. We create our future by what we do or don’t do today; it makes sense to try and understand it as best as we can. The biggest challenge in understanding the perspective for a smooth transition!
Foresight activity starts with horizon scanning, a method for detecting early or weak signals in the wider environment to identify potential threats, risks, emerging issues, and new opportunities.
Here, a body of employees who are working at the frontiers of the business, can capture early signals. Companies like Kodak and Nokia floundered because the leadership was distanced from the business environment for timely action. As opposed to Kodak, its rival Fuji Films was able to visualise the threats to the photographic film business and change its strategy, well in time. Today, once towering companies like General Electric and Kraft-Heinz are in the same spot. The first could not see the early signals on Clean Renewal Energy and the second, changing trends towards healthy food. Do you see weak signals in your organisation and the industry you represent?
Future is made up of a complex web of technological, economic, social, political and environmental changes. In VUCA, these changes accelerate and form complex relationship with each other. Instead of relying on external consultants, organisations must future ready their employees to detect early and weak signals that emerge from the edges of the business environment.
The next step, interpreting data and formulating a library of approaches to the future, generally consists of applying a combination of foresight techniques and practices. Here again, groups of employees can be trained to interpret the data from company’s perspectives. Every company contain maverick employees who are not too difficult to spot. They are rebels, question everything and everybody, do not respect hierarchy, rules, and processes. However, they are curious and possess explorers’ mindset, pursue data and facts. Some 5% of company’s strength consist of such employees. Instead of throwing them out, as many bosses would like to do, their insatiable energy can be channelled in interpreting the amorphous information, trends, technological development in a larger context emanating from the environment.
The critical challenging phase is in developing agile recommendations that could support the decision-making makers in its planning. In military & intelligence this has been practised for decades. The objective of foresight developed through horizon scanning is not to predict the future, which is simply not possible for complex socio-economic systems but to monitor signals and fine-tune various options. These options are in the shape of scenarios about the future, many too farfetched to be called “ridiculous”. Most scenarios will be discarded so the Futurists (group of employees given this task), will regularly test assumptions and patterns to find the few that will evolve into positive or certain trends.
Therefore, to understand and interpret the wide gamut of signals, both employees and senior leaders must be trained in critical thinking, an accepted survival skills mandatory for the VUCA world. In short, critical thinking starts with changing “know all” to “learn all” and “do all” mindset, suspending judgements and questioning all assumptions. The management and employees should learn to weigh evidence. How do we know what’s true and false? What is the evidence, and is it credible? Next is awareness & appreciation of varying viewpoints and different perspectives. Seeing Connections/Cause & Effect. Is there a pattern? How are things connected? Where have we seen this before and speculating on possibilities/conjecture What if? Supposing that? Can we imagine alternatives.
Organisations in the VUCA age, must prepare themselves for both the slow-moving future as Electric Vehicles have undergone the past 20 years of development and the unpredictable such as Covid-19. Long-term threats and complex challenges are all around us. As seen in cases described above, the organisations must adopt an anticipatory long-term approach and in doing so, they develop the ability to detect emerging trends at an early stage, proactively view future challenges and keep ahead of the learning curve. This requires designing of Training & Development programmes as well as individual & group learning opportunities. Effective anticipatory strategy can be a vital tool in ensuring that organisations continue to sustain and evolve into the 21st century.
