So what can leaders do to better anticipate changing conditions that may affect their future decisions? CEOs and other members of the C-suite can proactively prepare for change and ensure organizational success by following these five steps:
1. Pay attention to and discuss mega trends. While some trends are fleeting or short-lived, “mega trends”—such as population growth or decline, emerging market economy influence or the launch of disruptive technologies such as the PC or mobile device—are issues that are not going away and will cut across several industry environments.
Given their far-reaching impacts, leaders must consider how such trends will affect their industry and, in turn, their future business model. Consider that by 2030, an additional 1.5 billion people will be living on the planet, the proportion of the world’s population over 65 will nearly double and the largest rural-to-urban migration in history will take place. As these trends emerge, CEOs should consider how their businesses are poised to gain from these impending circumstances.
Kevin Tsujihara, CEO of Warner Brothers, scans widely for signals of change. “We need to anticipate where the market is going,” he said. Similarly, Google CEO Larry Page, in an interview with venture capitalist Vinod Khosla, discussed the need for business leaders to maintain a 20-year vision instead of a four-year vision.
2. Prepare for environmental uncertainties. “Environmental uncertainties” are those key forces of change for which experts cannot adequately predict trajectory or direction. While unknown, there is opportunity to prepare for these changes by ideating around the highest-impact potential game-changers along with the outcomes or conditions they might create. This exercise will illuminate how major uncertainties, such as resource availability, disruptive innovations, technology adoption or regulatory pressures might radically change the landscape in which you currently operate.
Although these question marks are innately unsettling, disruption should be viewed very much as a wealth creation opportunity that can be harnessed by looking for the anomalies from which you might benefit, exploit or leverage. The key is to proactively plan the potential moves that the business should take to adapt and win as things change.
For example, when a major defense company risked losing a significant portion of its business due to shifting federal priorities, the company implemented three innovation programs to reinvent the company’s business. One team adapted military GPS technology to track and recover ocean-based mobile fish pens when they stray off course. The company has turned this idea into millions of dollars of annual revenue, and technology previously used for defense is now helping to feed people, too.
3. Carefully consider competitors’ future strategies. Competitive anticipation requires more than gathering current-state competitive intelligence. Instead, actively play out what competitors’ likely positioning moves, innovation efforts or strategic steps may be down the road as conditions change. Work with a team to evaluate how today’s competitors and emerging foes may move in on your customers or change market dynamics in a meaningful way.
Conduct regular exercises to evaluate how you can outsmart the competition or perhaps change the game entirely. Rigorous competitive anticipation requires data, dialogue and a disciplined approach to openly test assumptions and derive valuable insights.
A major pharmaceutical company profiled how their biggest competitor stacked up against them in several key areas across five countries to clarify capability priorities for the different global regions. Insights gained from this exercise helped to inform the launch of their latest oncology drug for breast cancer.
4. Get close to customers. Assumptions about an organization’s business model will consistently be challenged as leaders listen to the worries and change considerations from key stakeholder groups — especially those customers or clients who buy from the company today. Understanding future customer needs, business directions and expectations offers critical clues to the resiliency of your current value propositions. Loyal customers will appreciate inquiry about their business challenges and gain confidence in your support as you invest time in learning about their wants and needs.
This should cut across all connections to your business—sales representatives, customer service and, of course, at the executive level. Consistent service and value will lay the foundation for more strategic dialogue over time. For example, toy company Hasbro recently designed and facilitated a focus group with both kids and parents to discuss the future of play. In an age where digital is outpacing board games, this helped Hasbro understand what drives consumer loyalty in an attempt to better predict their customer’s next move. In contrast, leaders at the Lego Group all but missed the digital revolution in toys and gaming. They didn’t have the insight to see around the corner in time to seize the new opportunity and paid a hefty price.
5. Broaden your network. Industry, business and general media outlets offer extensive information, yet we tend to focus more on providers with whom we agree than on those who oppose our views. Plus, with constrained time, outreach is often restricted. During planning exercises, senior leaders often congregate to share seasoned perspectives without the benefits of the younger generation who may see the impact of technology on our world, for example, through a different lens.
To combat a group-think or myopic view of future possibilities, leaders can benefit from a broader set of connections that challenge and even reshape their thinking. Consider diversifying your sources of insight—from the experienced and long-respected to fresh and diverse individuals who can bring new insights to your worldview. In fact, leaders of Whole Foods have formed autonomous, self-managing work teams who manage their own business, run their own P&Ls, make merchandising decisions, and are in charge of hiring and firing within very close knit teams who rally around the company’s mission.
The five principal strategies outlined here provide a solid foundation for information gathering and adaptive planning that can help CEOs ensure organizational success. No one can predict the future, but leaders armed with the right knowledge and insights can anticipate and prepare for changes that will impact their business down the road.
Coming in December: “Winning the Long Game: How Strategic Leaders Shape the Future.” by DSI CEO Steven Krupp and Founder Paul J.H. Schoemaker.
Six Key Elements of Strategic Thinking for CEOs