Learn to lead with foresight in the new hybrid work world.
The COVID-19 pandemic has sparked what I call crisis agility—rapid organizational change on a scale never seen before in times of peace. Many have experienced the sudden shift to remote working and the ad hoc re-engineering of business processes.
Some have seen production lines transformed almost overnight from producing automotive engines to intensive care ventilators, household products to hand sanitizers, fashion lines to personal protective equipment to meet urgent international demand. According to the 2020 Dell Technologies Digital Transformation Index, 79 percent of the 4,300 surveyed senior directors and C-suite executives reinvented their business model as a result of the disruption the pandemic has caused.
But now we need to ask ourselves an essential question: How can organizations get better at seeing around corners and have the foresight to anticipate major issues before they arise? How do we engineer foresight as a practice?
Go Forward to Work Institute, in partnership with Harvard Business School, crowdsourced best practices about the future of work from more than 2,000 executives during the pandemic. I delve into the results of that research in my forthcoming book Competing in a New World of Work. Here are some of the long-term lessons regarding foresight for organizational culture and behavior.
Be ready for the unexpected
History shows that bursts of innovation always follow natural disasters like earthquakes, floods, or tsunamis, such as the terrible Boxing Day Tsunami in the Indian Ocean in 2004. In the immediate aftermath, there was a sharp rise in patents for detection and early-warning technologies, followed by a slower, longer-rising trend in patents for mitigation technologies.
What the Go Forward to Work Institute identified is evidence of a framework for developing disciplined foresight. Some organizations were able to detect the emergence of COVID-19 as an earlier threat and make contingency plans earlier than others.
But they were the minority. Research suggests that only about one in four Fortune 500 companies has some form of foresight practice in their executive ranks.
The first step is detecting early warning signals of change. A signal is something that can affect your business, similar to how a radar picks up incoming airplane signals.
The insurance business Aflac, for example, was among the first in the US to detect early warning signs from business partners in China and its Japanese operating divisions of the emerging threat COVID-19 posed. Rather than wait to see how events would unfold, Virgil Miller, executive vice president of Aflac and president of Aflac Group, shared with me that he started preparing his US team for social distancing protocols and remote working.
Ask yourself these two questions to assess the future.
What is our decision-making horizon? Teams need to develop attentiveness to short- and long-term signals that align with the company’s planning horizons for strategic decisions in the business.
What critical assumptions am I making about the business and the nature of its environment? That is about understanding the underlying assumptions you make about the company’s revenue sources, business model, culture, and human capital.
Further, consider what you take for granted about the company’s day-to-day operations and whether you are in a position to decisively change organizational tactics and strategies if your assumptions were challenged or temporarily proven incorrect.
For example, border closings and restrictions on international travel challenged the fundamental assumption of Airbnb’s business model—that people can move freely from place to place. The company’s response was to focus on another underlying assumption: that people need variety and want to experience adventures outside the confines of their day-to-day life.
Airbnb pivoted to offer virtual experiences around the world, connecting hosts and virtual visitors. Business school professor Mauro F. Guillén describes the company’s move as a “lateral extension of the firm’s existing capabilities, cementing—not undermining—its strategic intent.”
But detection needs to be a team effort rather than an individual burden. That requires encouraging everyone in the organization to proactively and creatively look around the bend.
Create a foresight task force
Putting together a cross-functional foresight task force to scan and detect the various signals of change will create a focal point for those efforts. It’s likely you already have individuals within your company who have responsibility for monitoring emerging developments in key fields and within the business.
For example, team members in IT are looking for developments in technology or those within corporate affairs are looking at developments at a governmental or policy level. In finance, individuals are looking at the economic headwinds.
In 2019, Coca-Cola CEO James Quincey set the goal of transforming the company’s operations to be able to plan based on what was happening on the ground in each of its 200-plus markets around the world.
More than that, he wanted his business to be able to course correct, shift, and scale great ideas from one market to another. If there was an emerging lesson in one market, there should be the potential for crowdsourced knowledge to reach a matching market on the other side of the world.
And all that should happen with velocity. He wanted real-time data intelligence about the business, not yesterday’s, last week’s, or last month’s performance.
By April 2021, he reported that the transformation was delivering results and teams were acting with foresight. “Our operating unit and category leadership teams are working together to identify the most promising combinations across the industry based on economic outlook, consumer trends, channel dynamics, and execution imperatives,” Quincey said during the company’s Q1 2021 earnings call.
Long gone are the days when planning and resource management are done by spreadsheet. Today, there are enterprise technologies that deliver real-time data across functions and give insight into what’s happening, why, and where organizations are headed next.
So, whether it’s the chief intelligence officer, chief financial officer, or your other C-suite counterparts who already hold the task of monitoring key developments in their fields—or senior executives to whom they delegate the job—those individuals need to meet monthly and quarterly.
Also crowdsource insight from outside your organization. Who are the experts who can aid your team’s thinking every month?
Whom should your foresight task group invite to its meetings and engage in its thinking—which strategists, risk experts, and futurists with domain expertise in the STEEP (sociological, technological, economical, environmental, and political) categories? Identify who in your industry is well known for looking to the future.
To give the task force’s work focus, have members focus on the five STEEP macroforces:
- Sociological factors such as population and social changes that may affect demand—for example, toy manufacturers being mindful of changes in birth rates
- Technological factors such as the emergence of robotics, information technologies, energy generation, and materials science
- Economic factors such as market cycles and macroeconomic factors like interest rates and consumer confidence indicators
- Environmental factors including those that affect supply chains, from extreme weather to access to resources
- Political factors such as regulation and policy changes
Read the signals
History can guide us to better understand the future. Start honing skills to detect change signals by looking at recent STEEP factors. Consider these questions:
- What significant events in the STEEP factor's recent history created a sudden transition from one era to another?
- How did that change affect the business or industry?
- What were the variables in that change?
- Based on your best understanding, what is the current trend for this factor?
- Do you think those variables will change linearly in the near-term future, or are the changes in the variables cyclical, seasonal, generational, exponential, or orthogonal in nature?
Next, assess the likely impact of those signals on your organization. You need to develop the equivalent of a weather radar.
And that’s the task force’s main job—developing and maintaining a risk radar for the company. Using the STEEP system, the radar will track the near- and far-term change signals and monitor their impact on the organization, even if the company isn’t actively managing them.
Then proactively respond to the most plausible future scenarios. Andy Hines at the University of Houston Foresight Program has identified four archetypes of change as guidelines for writing scenarios for four distinct possible futures:
- Baseline is the most predictable gradual, linear, incremental change scenario. It’s what happened yesterday and what you expect to happen tomorrow.
- New equilibrium is where you experience a new era because a major challenge confronts how the operating environment has been operating and forces it to adapt to save itself.
- Collapse is the worst-case scenario for your projected future. What if everything goes wrong and the system falls into dysfunction?
- Transformation is when the operating environment has completely changed because of a big shift in technology, policy, or the economy.
The foresight task force needs to identify what could happen if a signal on the risk radar follows one of those different archetypes. What’s the topline action plan in each scenario?
At Morgan Stanley, its foresight approach is run through a massive machine-learning-assisted operation at the company’s Fusion Resilience Center. The center was set up in the wake of Iranian cybersecurity attacks on the US financial industry in 2012.
Today the center analyzes hundreds of thousands of data points daily looking for signals that could disrupt operations. In mid-January 2020, it picked up warning signs of the COVID-19 lockdown in Wuhan, China, and started to model worst-case scenarios if the disease went global.
For all its technical sophistication, the center’s threat analysis is reliant on human assessment and validation. Jen Easterly, a West Point graduate, retired military intelligence officer, former National Security Agency employee, and special assistant to President Barack Obama, is at the helm.
By mid-March 2020, when virus infection rates began to spike in New York City, the center’s forecasts had already predicted that employees would likely need to work from home during a public health emergency. The bank’s leadership had already made a critical decision to distribute secure technology to every employee in the US.
Morgan Stanley was ready for this new era of the future of work and didn’t miss a beat.
Go forward to work, not back
The purpose of foresight is to identify what organizations need to do today to succeed with whatever tomorrow brings. Through foresight, they can increase their adaptability muscle, plan for possible future states, and act proactively to thrive.
To be a high-performing company in this hybrid work world, teams need to work together differently. Teams must adopt new working behaviors and practices. And as leaders we must embed foresight as a strategic skill and empower teams to think boldly and work toward extraordinary outcomes.
Forward-Looking Industry Insiders
Your foresight task force can learn from those in your industry who are known for seeing ahead into the future. Here are some examples.
- Marc Goodman, founder of the Future Crimes Institute, is a former futurist-in-residence with the FBI and is knowledgeable on cybercrime threats and the perils of surveillance capitalism.
- Nicolas Berggruen and the Berggruen Institute offer imaginative insights about the nexus between business and democracy.
- Nouriel Roubini, a New York University economics professor, predicted the housing crash of the Great Recession and has thoughtful ideas on how the future of finance may evolve.
- Ramez Naam is someone to watch if your company’s future is tied to energy production. For years he’s been tracking the steady decline in solar energy costs and estimates that oil and natural gas power plants will be uncompetitive with solar installations before 2030.
- Leo Tilman and Tilman & Company are leaders in exploring risk intelligence across various industries.
Read more from CTDO magazine: Essential talent development content for C-suite leaders.