How Strategic Foresight Succeeds: Prepared for the Future

April 18, 2023

What do a crystal ball, a time machine, and strategic foresight have in common? All three promise us a glimpse into the future - but only one method is truly effective in preparing us for what is yet to come.

As leaders, it is our job to act in the present and set the course for a successful future.

WU strategy experts Michael König and Konrad Holleis, Head of Custom Programs at WU Executive Academy, explain why this ability enables us to manage the past, present, and future simultaneously, and why companies can not only prove themselves in the BANI environment but also actively shape their own future.

What is Strategic Foresight?

Strategic Foresight is a tool that allows companies and organizations to proactively shape and manage future developments and trends in their own area. In contrast to other planning and analysis tools, Strategic Foresight enables a multidimensional view of the future. It's not just about making forecasts, but rather about developing and analyzing different scenarios to make informed decisions.

Strategic Foresight takes the past and present into account, thus creating a holistic view of the future. Companies that master this skill can not only respond quickly to changes, but also act proactively and purposefully. Strategic Foresight is therefore a crucial component for companies to be successful in a constantly changing and challenging environment.

Forecast vs. Foresight: It's about multidimensionality

Companies are increasingly finding themselves in a BANI environment, where human survival instincts are urgently needed in leadership. "However, we are not talking about apocalyptic chaotic conditions that simply require giving up. On the contrary: companies can not only prove themselves in a BANI world but also actively shape their preferred future. The key is Foresight," says Konrad Holleis, Head of Custom Programs at WU Executive Academy.

Strategic Foresight

In contrast to mere forecasts, Foresight, which includes scenario planning and strategic planning, deals with multidimensional futures. Foresight is the ability to manage the past, present, and future simultaneously. Companies that are well-positioned in this environment know their past, successfully manage the tasks of daily operational business, and actively shape their future in a BANI world. They are not irritated by blind spots or suddenly emerging new phenomena, but can - like humans - anticipate alternative futures, respond quickly and deal with new developments in a structured manner.

The Elements of Strategic Foresight

In this section, we will explore and discuss the various elements of Strategic Foresight and explain how they can be used in strategic planning and leadership.

Trend Analysis and Signal Monitoring

Trend analysis and signal monitoring are important elements of Strategic Foresight to identify future developments and trends and understand their impact on the organization. By systematically observing and analyzing relevant signals and trends, companies and organizations can quickly respond to changes and seize opportunities.

Scenario Planning and Development

Scenario planning is a vital aspect of corporate foresight, enabling organizations to create and analyze different possible futures and their potential effects on the company. By crafting a range of scenarios and exploring their outcomes, organizations can make informed decisions and effectively respond to future developments. This process of scenario development not only helps in preparing for potential challenges but also allows businesses to capitalize on emerging opportunities.

Visions and Goals

Visions and goals help provide a clear direction and prepare the organization for future developments. By having a clear idea of the desired future and formulating goals, organizations can ensure that their activities are aligned with achieving these goals.

Action Options and Strategy Development

Action options and strategy development provide the organization with a clear direction for action and help successfully overcome future challenges. By developing various action options and formulating a clear strategy, organizations can quickly and purposefully respond to changes and seize opportunities.

Step-by-Step Guide: How to Apply Strategic Foresight in a Structured and Systematic Way

  • Step 1: Collect data and information - Gather data and information on the markets in which your company operates to gain a solid understanding of the dynamics and developments in these markets. Examples include customer feedback, market research reports, industry analyses, and competitive intelligence.
  • Step 2: Identify trends and signals - In the foresight process, identify trends and signals that indicate probable futures and the direction these markets could be heading. A careful analysis of trends and signals can help identify opportunities and challenges early on. Examples include changes in customer behavior, technological innovations, regulatory developments, and geopolitical changes.
  • Step 3: Develop scenarios - Create various scenarios based on the identified trends and signals. These scenarios can help understand the possible impacts of future developments on your company. Examples include changes in market conditions, changes in customer needs, or changes in the regulatory environment.
  • Step 4: Formulate visions and goals - Formulate clear visions and goals aimed at leveraging the challenges and opportunities of future developments and successfully positioning your company. Examples include increasing market share, improving customer loyalty, or expanding the product portfolio.
  • Step 5: Identify action options and develop strategies - Identify action options and develop strategies based on the formulated visions and goals. These strategies should be aimed at successfully preparing your company for future challenges and opportunities. Examples include the introduction of new products or services, entering new markets, or collaborating with other companies.

Challenges and Best Practices in Applying Strategic Foresight for Professional Development and Innovation Management

The application of Strategic Foresight is an important component of successful business planning and innovation management. However, there are challenges that companies should consider when applying Strategic Foresight.

One of these challenges is managing the flood of information and ensuring that the right information is available at the right time. Another challenge is the predictability of events such as natural disasters or political events that can influence markets and trends. In this case, event monitoring systems and processes can help to respond quickly and effectively to unforeseen events.

To address these challenges, there are proven best practices for the successful use of Strategic Foresight. Business schools and professional development programs can play a crucial role in fostering these practices. Encouraging ongoing professional development and training for all employees is crucial for building knowledge and experience in Strategic Foresight.

Another example of a best practice is the establishment of working groups focusing on specific markets or trends and ensuring continuous monitoring and evaluation. Successful application of Strategic Foresight also requires that companies remain flexible and adaptable. Through a culture of learning and continuous improvement, companies can quickly respond to changing market conditions and events while keeping their visions and goals in mind.

In summary, by applying Strategic Foresight, companies can be proactive and successful in innovation management. Challenges such as information overload and unpredictable events can be addressed through best practices such as training and working groups offered by business schools. Through continuous monitoring and evaluation, companies can quickly respond to market changes and successfully implement their visions and goals.

Success Stories from Practice

There are numerous examples of successful applications of Strategic Foresight in companies and organizations.

One example is the Finnish paper manufacturer Stora Enso. The company recognized that the market for traditional paper products was shrinking and therefore focused on developing new, innovative products targeting the growing market for packaging and biomaterials. By applying Strategic Foresight, Stora Enso was able to identify market trends and potential disruptors early on and adapt accordingly.

Stora Enso - Strategic Foresight
With the help of Strategic Foresight, Finnish paper manufacturer Stora Enso has transformed its production to adapt to upcoming market developments at an early stage.

Another example is the Danish company Novozymes, which produces enzymes for various industries. By using Strategic Foresight, Novozymes was able to identify new markets and applications for its enzyme products and quickly tap into them. As a result, the company was able to maintain its growth and establish itself as a market leader.

The Federal Employment Agency in Germany also used this method to analyze the future of the labor market and develop targeted measures to adapt to the changing labor market. As a result, the Federal Employment Agency was able to improve its services and successfully respond to the changing working conditions.

Overall, these examples demonstrate how the application of Strategic Foresight can help companies and organizations successfully respond to changing markets and trends and develop innovative products and services. By identifying trends and disruptors early on and taking measures to adapt, companies and organizations can strengthen their position in the market and improve their competitiveness.

The Practical Tool for Foresight: Strategic SWOT

Konrad Holleis

Konrad Holleis

  • Head of Custom Programs

Although the BANI* world is diverse and challenging, don't be deterred. Sometimes, even 'old acquaintances' from strategic management can be used very well as foresight tools, such as the SWOT analysis. This is recommended for all companies that want to deal with foresight for the first time and want to develop a basis for scenarios.

It is a practical tool that can provide a basis for scenario development, especially for companies that have no experience with futures research. Unlike traditional SWOT analysis, which focuses on the static analysis of strengths, weaknesses, opportunities, and threats, the strategic SWOT approach is dynamic and forward-looking. It enables executives to make decisions that shape the future of their company by examining the future of their business environment.

But how does it work?

[Translate to English:] Strategic SWAT Step 1

In the first step of the strategic SWOT analysis, you need to assess the macro environment with a PESTEL analysis, in which political, economic, social, technological, environmental, and legal trends are examined that will have short- and long-term effects on your company. Then, you can filter the data with an Issue-Impact Matrix, in which the most critical risks and opportunities for the future of your company are determined. For the microenvironment, you can use Porter's Five Forces model to identify competitive forces and potential strategic alliances.

[Translate to English:] Strategic SWAT Step 2

In the second step, analyze your company's value chain to identify strengths and weaknesses compared to your competitors. This will give you a holistic view of your business model and its potential compared to others.

[Translate to English:] Strategic SWAT Step 3

In the third step, you finally compile everything in the familiar SWOT matrix, which shows how your company's strengths can be used to seize opportunities or mitigate risks, and how weaknesses can be addressed to prepare for potential challenges. The strategic SWOT analysis not only provides a basis for forward-looking action but can also help you identify previously unforeseen trends or phenomena that can form the basis for scenario development.

With the help of the strategic SWOT analysis, you can create a solid database of forward-looking information that can flow into multiple scenarios. It can also be embedded in an ERP system so that it becomes an integral part of your company's future planning process. So don't be intimidated by the challenges of foresight in the BANI world - use the strategic SWOT analysis as a practical tool for future planning!

The Magical Power of Strategic Foresight

    Michael König

    Michael König

    • Department of Strategy and Innovation
    • WU Wien

    Strategic Foresight works so well because it combines classical backward-looking performance management systems with operational strategy implementation and situational tools of future management

    There are five generations:

    1. The first generation includes metric- and projection-oriented early warning systems,
    2. The second generation includes indicator-oriented and causal chain-based early warning systems. This collection of historical data can also be called Hindsight, which means the ability to understand the past well. The information gained from this is valuable, as it provides insights into a company's past performance, but usually has no predictive power for the company's future.
    3. The third generation is the concept of weak signals. Minimal, weak signals generally announce significant changes, and if an organization is set up in such a way that there is an internal culture of communication of such signals to decision-makers, strategic turning points can be identified earlier and operational measures can be initiated quickly. This includes simple scenario techniques, cross-impact vulnerability analyses, the Delphi method, or monitoring discontinuities.
    4. The fourth generation of early warning systems consists of integrated, holistically networked tools, such as wild card management, business wargaming, multiple scenarios, and viable systems. This is specifically about possible futures for the company.
    5. The fifth generation of foresight is currently the focus of intensive scientific research: Under the working title "Strategic Futuring", possibilities are being explored to make alternative futures "experiential" for companies, for example, in the form of strategic holodecks, virtual reality environments, or by generating memories of the future. Research efforts are interdisciplinary, as business economics benefits enormously from the findings of other scientific branches, such as astrophysics (e.g., how can "unknowns" like exoplanets be found even though they are not directly observable with current means?) or quantum mechanics. Exciting progress can be expected in this area.

    Conclusion

    You have learned how to successfully implement Strategic Foresight in your company, how to overcome challenges, and which best practices you can apply. You have also learned about the Strategic SWOT analysis and how to benefit from its advantages.

    This valuable concept is taught these executive education programs:

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