Wrong futures?

Turbulence is an ever-present property of most organizations’ operating environment. Thus, different applications of futurizing have become an important practice as we navigate towards uncharted waters ahead. But, paraphrasing on a previous blog-text I wrote, one could ask if our futurizing approach is focusing on the wrong futures?

One frequently used illustration in the scenario field is the onion-like graph, developed from the writings of Kees van der Heijden. The contextual environment surrounding the transactional environment, incorporating the actors, which surrounds the focal actor. Very logical. At the same time, the future of most focal actors is to a great deal determined by the future of its customers. Can it be that focusing on the focal actor, our organization, might lead to an insufficient understanding of the waters ahead?

Let us take a brief look at some big companies that might have looked at the wrong futures. General Motors was for 100 years a dominant company in the automotive industry. Focusing on profiting from financing, they did not pay attention to the changing landscape and the new demands from customers. Bankruptcy was the consequence for one of the worlds biggest companies. Kodak, that was one of the world’s biggest film companies, did focus and protect its film business although they recognized, and invested in digital solutions. The focus on their traditional core led Kodak to file for bankruptcy in 2012. A third similar example could be Nokia. The company had very hard to recognize the potential of smartphones, perhaps it had a hard time connecting to people, their customers. A major downfall and restructuring followed. These examples have strong connections to consumer markets. They also point out that focusing heavily on your own future may be an activity that focuses on a soon obsolete business. In industrial markets we see that for most B2B activities there is a small number of customers that form the core of the business. Disconnecting from the future of already a few might have profound consequences. Being too close to home might lead us to focus on the wrong futures, our owns in stead of those of our customers.

The customer as the core of strategic thinking is not a new idea. Personally, I have had the benefit of being a colleague to pioneering consumer centric strategic thinkers, the late “management guru” Richard Normann and Professor Christian Grönroos. Appreciating that the success of an organization is dependent on the success of its customers is key. And even broader, it is a question of the success of the value creating system that the company is part of, a system of interactions between actors like customers, suppliers etc., as so well highlighted in the seminal 1993 HBR article “Designing interactive strategy” by Richard Normann and Rafael Ramirez.

It seems to me that a very fruitful futurizing approach is to focus on the future of the value creating logic and its dynamic systemic future properties. This would naturally increase the complexity of the analysis, but at the same time reveals more potential opportunities and risks. A futurizing approach like this would also redirect the strategic conversation. To build on Norman & Ramirez, one would say that the key strategic task is the design and reconfiguration of roles and relationships among the constellation of actors to mobilize the creation of value in new forms and by new players. Guided by our understanding of plausible futures, the organization would design and develop its own value creating system, which has customers as a very central position. Shifting the focal actor of the analysis from the own organization to its customers, or its value creating system, will also enable engagement in more strategic dialogues with stakeholders, thus enhancing the understanding of what might come at you, given that one has the proper processes and competencies to interpret signals.

Many scenario-building approaches deal with the changes coming from the contextual environment. We build scenarios from plausible outcomes of e.g., technologies, macroeconomics, changing consumer behaviour etc. These approaches seldom incorporate how actors in the transactional environment might drive change, seizing opportunities, and sometimes create new maps that might change the landscape. Fortunately, we start to see fruitful analyses incorporating iterative interaction between the contextual and transactional environments. Naturally, more demanding but the approach does pay off. We might understand coming moves of major players and emergence of disruptors from the start-up field. The analysis might lead us to discover pockets of the future in the present, to quote Bill Sharpe and Tony Hodgson in their Three Horizons conceptualization. Perhaps the new Teslas, Amazons, Facebooks and alike would pop-up in the analysis. Extending this thinking is a topic for coming writings.

To build scenarios for plausible futures of our customers is central for contemporary strategic planning. Doing so brings a better understanding how we can continuously support our customers, and other actors in our value creating system, to prosper and make good in times to come.