Practicing Strategic Foresight

Futurist tools: 10 methods you can use to inform far-sighted, coherent strategies in changing times.

Strategic Foresight, representing the first steps in our strategy design framework, tunes you into the ways the world is changing and enhances the context within which strategy is developed, planned and executed.

It is about asking better, more impactful questions so that you can form truly coherent strategies and identify opportunities for real change.

The article was originally posted on our website. https://www.designfarmco.com.au/

What is Strategic Foresight?

If you are reading this, there is a good chance that you’ve heard about the unprecedented rate of technology-driven change and challenges to traditional business approaches. The path to sustainable advantage is less and less through relative position and scale.

Instead winning strategies are based on an organisation’s ability to learn, translate this to action and then rapidly adapt. To go into the reasons in detail will require an entirely separate, focused article. The important thing to remember is that taking baby steps towards the future or repeating well-trodden paths is no longer enough.

Organisations need to continually reframe the way they think about what they are trying to accomplish and see a different set of possibilities, competitors and threats. Eminent strategic thinker John Boyd (known for the influential OODA loop model of strategy), states that change isn’t simply about acting faster or more accurate planning. Instead competitive power actually flows from observation and orientation. Specifically, the ability to change from one orientation state to another through action.

This is not just reactive, it can be a highly effective offensive strategy and in a simplistic way underpins the success of many of the Tech Titans dominating industries today. They use technology to spin the wheel faster and faster, orienting and reorienting to create novel situations faster than competitors can adapt. This creates ambiguity and volatility that confounds competitors using traditional approaches while the adaptable pull further ahead.

This article aims to cover some methods for observing the environment, understanding the underlying dynamics, trajectories and assumptions, then orienting your business with this in mind. In our end-to-end design framework (A flow from Prospect, to Sow, Cultivate and Harvest), this aligns with the Prospect phase. The starting point is getting in tune with the emerging realities of your market and understanding what might take hold and be sustained. We refer to this early Prospecting activity as ‘Strategic Foresight’.

Our Prospect-Sow-Cultivate-Harvest design framework

Strategic foresight is a set of methods that sit at the beginning of the ‘Prospect’ phase of our end-to-end design framework (see area marked in red).

Strategic Foresight enhances the context within which strategy is developed, planned and executed. It is about asking better, more impactful questions so that you can form truly coherent strategies and identify opportunities (Sow) that will enable real change (Cultivate and Harvest). It requires people who are skilled at seeking, tuning into and understanding to signals of what is to come.

It is not about being certain about the future but having a toolkit for understanding the forces shaping your business environment and interpreting new things you’ll encounter.

If you believe your industry and market is subject to change (and we know disruptive change is the new reality), then you need to continually read the signals and form a model of that change. You need to have a sense of what is changing, the speed of change and the possible impacts on your value chain/market position.

Often, the exercise leads to a richer understanding of your current position, revealing mismatches between your underlying assumptions (or what you think is happening) and what is actually happening. You should seek to find the things that challenge your worldview and do it while there is still time to act. Otherwise the pace of change or ambiguity created by the actions of others will leave your organisation disoriented and unfit to catch up.

Strategic Foresight is by design a challenging activity and requires different thinking than traditional management approaches. Therefore, we have put together 10 methods that your team can use to begin understanding the future and shaping the problems you need to solve.

Before you begin, get outside

The first thing you need to do is get outside and go for a walk. Not just literally, although that can be great for creative inspiration, but to move outside your existing frame of reference and way of working. Seek to improve and broaden the information you have to hone your ability to see the world in new ways. You may discover you are lost or find a path you didn’t realise existed. All of the techniques listed below will offer better results if you feed them better information.

In some ways, Strategic Foresight is not as exotic as it sounds. It follows the typical strategic cycle of; observing the environment and conditions, orienting yourself, deciding where to play/attack and acting. However, it adds a few dimensions of scope, scale and uncertainty. You will soon need to embrace bigger questions, smash together a broader set of inputs and stretch your thinking to further, less certain horizons.

In this domain there is a broad and ever evolving set of tools with some common aims;

• To challenge your automatic way of thinking.
• Tune your ability to observe systems and behavior in new ways.
• Expose yourself to new groups and influences.
• Create compelling and insightful narratives that orient your organisation for the future and guides decisions today.
• Envision pathways to the future
• Test your theories and continuously adapt

Next, let’s dig into a few Strategic Foresight techniques. You may notice there are some useful connections between them.

Look for the edge

The first stage of forecasting is to observe and monitor change. This involves systematically scanning the environment like a radar to spot the novel, unexpected and potentially profound. The best practitioners snack on a hugely diverse set of influences, observing the broadest possible set of trends, technological developments, data and emerging behaviors.

Start by exposing yourself to people, problems and places outside your typical frame. One veteran forecaster does this by scheduling time with much younger students to understand their assumptions and how they approach the world. Practice spotting behaviors or weak signals at the fringe of society or a research area that may indicate an emerging trend. The following are two techniques for this stage.

Technique 1: Stories from the edge

A participatory activity to collect and share stories of people and behaviors that are outliers but show signals of potential value. This can be as simple as collecting stories of things that seem curious, confusing or interesting then sharing and critiquing them as a group. This is an easy practice for exposing and tuning your thinking. However, this article outlines some methods that can be used to extend this more systematically.

Technique 2: CIPHER

The CIPHER model, developed by Amy Webb, is used to decrypt possible emerging trends from observing weak signals. CIPHER is an analogy that stands for:

• Contradictions: In a basic sense, this refers to a change in the ‘natural order’ of effect and connections. That is, either a decoupling of things that are usually connected or coupling of things that are usually disconnected. For example, when two things usually succeed or fail simultaneously but that pattern begins to break down.
• Inflection: Something happens to catalyse a significant acceleration in a research area or competitive landscape. For example, this can be observed through large increases in funding, surmounting of previous technical limitations, a shift in political and public opinion or extreme events.
• Practices: The emergence and co-evolution of new practices and technologies that threatens the existing dominant paradigm, practices, mindsets or assumptions. What is something that once was commonly believed that is being challenged? For example; ‘Solar will never compete with coal’ or ‘people will never hop into a car with a total stranger’ connected via an app.
• Hacks: What are people doing with something that it wasn’t originally intended for? Or what are people substituting a product for that wasn’t seen as a natural competitor?
• Extremes: Where are people pushing boundaries, pursuing novel goals or different routes?
• Rarities: What seems out of place or an unusual outlier? It is important to note that not all difference is valuable, but when it appears to be solving a fundamental need or creating new behaviors then it deserves attention.

Many of these won’t yet be obvious to all and sometimes difficult to hear above the hype. That is why collectively they represent what is called weak signals. Once you have identified signals and formed a theory, you can dig deeper to observe and model the patterns in more detail.

Tune into the systems

The next step is to put the signals in context of recurring cycles or patterns of change. To reveal the patterns that are playing out and begin to address the next level of questions. These might include; Is my thinking sound? When might this change or effect occur? Does this have the potential to grow to anything more? What is the potential impact?

Technique 3: Causal Layered Analysis

This technique is a way to get your thinking to dive ‘below the surface’ and move past fragile, automatic or shallow thinking. It helps break down a complex topic and move you towards more powerful ‘first principles’ understanding. It can also be used to better understand people and what it might take to solve problems or change behavior.

The technique is represented by an iceberg/pyramid model with the following structure:

• The Litany: The common but shallow understanding of an issue. Thinking based on current conditions and events. Learn to spot then get beyond this.
• The ‘waterline’: Representing the barrier between what is commonly understood and what is hidden.
• Underlying systems and historical context: The possible causes rooted in social and economic patterns and interconnections.
• Worldview or Mindsets: The beliefs and social discourse that supports or challenge the underlying systems.
• Myths: Core assumptions, stories and models about how things work. Sometimes, deep change disrupts long held myths about what is possible.

Technique 4: ASCENDS model

ASCENDS is a model that I am developing, partly in response to a review of forecasts I made more than a decade ago. It is inspired by the CIPHER model (listed above) but designed to apply the next layer of analysis to the signals identified in that model. It is also a useful analogy that describes the inflection point, the upwards tick of the growth curve, as a trend takes hold. The model can be used to put a signal in context and raise further questions about when it might take off and the potential for impact.

• Abundance: If the weak signal was to take hold and form a trend, what activity or resource might become newly abundant? What is currently abundant that might be impacted?
• Scarcity: What current scarcity might be addressed? What new scarce activity or resource might emerge. This is beginning to step into second order effects, which can be notoriously hard to accurately predict. Instead the goal is to exercise your ability to observe and recognise settling trends sooner.
• Collisions: What other trends or factors might this collide with? Start to smash ideas, observations and trends together to see where they might connect, form feedback loops or run against each other.
• Exponentials: Are there factors that might cause the growth to become exponential? Are there early signs of behavior or effects that seem small, but are gathering steam quickly?
• Novelty: The concept must be understandable. Some innovations come too early or have not yet been refined to a point where they can be adopted. Is there something different this time? Is there another trend that might collide and suddenly make it understandable to the public?
• Democratisation: Is it something that might become accessible to the masses? Is there something that could cross a previous barrier? Is our assumption that it is an edge case, a niche or product for the rich only about to be challenged?
• Slowers/stoppers: Things that may add friction or reactions that limit progress. Are there signals that a counterflow is forming? What barriers or complexity might delay change? Similar thinking will be employed again at later stages, but with a lens more focused on the current context and organisation.

Technique 5: Evolutionary Pattern Analysis

When you dig below the surface to reveal underlying systems and historical contexts, you will notice there are repeating patterns and relationships playing out at different levels. Developing an understanding of these is critical to achieve a more solid foundation for your reasoning. You will be able to better model observations and put them in context. This is a phase where you should also look backwards at the historical accounts of change and growth to see if this fits with the pattern or a new one is emerging.

There are a number of interrelated models that can be applied. Including but not limited to the well-known Hype cycle, S-curves of growth and Adoption curves. Overarching all of these is the dynamics of technology evolution best summarised as an ongoing cycle where technology fuels a feedback loop that branches out in all directions with the following pattern:

1. Existing technology is used to create new technology.
2. The new technology addresses a need in a new way.
3. Some old technology is eliminated.
4. This change creates new needs and opportunities.
5. Technology evolves out in all directions, converging and creating more complex forms.
6. At each step complexity and friction are abstracted away to free people for higher-level tasks (hence one reason for the emergence of new needs).
7. This can be observed at different levels, from the small scale up to entire economies.
8. Occasionally these dynamics combine for a more fundamental shift, disrupting existing models and industries.

Understanding patterns and effects like this contributes part of the set of mental models you need to navigate the emerging world and develop a fuller appreciation of current context and past events. But be careful not to over pattern match and try to fit everything into past models and miss the new.

Where are we now?

If you were to limit your strategic thinking to the future, external environment then you are only working with half the picture. Part of situational awareness is obtaining a deeper understanding of your current context and environment. Also, it is inevitable when looking at emerging trends or evolutionary cycles you will start to understand your current position in new ways. This is a crucial step in developing concrete pathways and driving decision making.

Technique 6: Wardley Mapping

Named after its inventor, Simon Wardley, this technique is an example of a systematic approach to mapping the position and evolution of components of your business to increase situational awareness, reveal patterns and inform action. The components represent a detailed breakdown of the entire value chain required to meet a user need.

On one axis components are laid out according to the level of visibility to the user. This axis allows you to plot the elements required and connections in great detail. This reveals multiple layers of a value chain. On the other axis the components are aligned with their stage of the evolutionary technology cycle. Progressing from a newly emerged, novel solution through to a fully industrialised component or practice. All components evolve through this inevitable cycle. This axis represents the specific climate for the component how the landscape is changing (trajectory). It takes some practice to do, but the structure reveals a lot about a company, it’s capabilities and the industry it occupies. It also provides an anchor for modelling multiple scenarios and intended actions for the future.

Technique 7: Scenario planning and Backcasting

This technique requires the formulation of scenarios describing multiple potential future states and events. It can help you develop the ability to conceive the different outcomes and clarify potential consequences of decisions and events today (Scenario planning). Alternatively, you can explore by envisioning desirable outcomes then work backwards through the alternative paths to get there (Backcasting)

These techniques are ideal to be done collaboratively or in a workshop. It is vital to be able to smash together multiple points of view and consider alternative paths and second order effects. You can ask: What would happen if a certain event or change occurred? What would need to happen for this future outcome to occur? Then you can map the steps and trajectories that lead there to further deepen your perspective.

After plotting these alternative futures and paths, you can apply some measures to categorise or ideally quantify the impact. One way to categorise is the degree of certainty including possible, plausible, preferable and probable scenarios. Another is the degree and scope of potential impact. The goal is to estimate the probability that something will come to pass so you can focus investment, increase the accuracy of decisions and be more able to adapt to less predictable events. Where possible, do this using data. Where accurate data and models do not exist, create a logical theory that can be compared to observations.

What might go wrong?

While this phase may seem prone to negativity, it is a necessary step to think more holistically. Successful foresight depends on not just focusing on the shiny trends and preferred outcomes. Instead organisations should look to expose multiple angles early and analyse the potential failure states in order to drive effective strategy.

Technique 8: Inverted thinking and checking your biases

Whether you are using a canvas, engaging in a collaborative workshop or independently brainstorming; The key is to find ways to intercept and invert your automatic thinking and reference points. For example;

• While you have envisioned a desirable future, you must also consider the potential negative consequences of your actions and decisions. For example; If you design a ship, you also design shipwrecks. Now is the best time to reveal this.
• Some teams invert their thinking by running a pre-mortem identify and remove obstacles to success. This is an exercise often performed with props and a ritual, where the team collaboratively identifies all the ways an initiative might die.
• In some circumstances a failure in one area is enough to negate success and a lot of work in all other areas. Sometimes referred to as “multiplying by zero” issues. While you need to identify positive multipliers, you also need to identify these ‘zeros’ to focus on the most critical elements or waste.
• Law of diminishing returns. Is there a factor that caps the potential value or provides significant friction? Identifying this can help limit overinvestment or overreach.
• Find a way to expose distorted thinking and check your biases. We tend to maximise the positives of things we like or feel familiar. This causes people to miss or minimise crucial information and nuance. You need to dedicate a time to put a lens on your biases or the biases of your organisation. This can be done by involving an outside team, physically shifting to a different, stimulating location, or applying a bias checklist.

Form and test theories

Now, you need to apply the situational awareness and selected scenarios to inspire and inform action. It is not enough to just have a list of predictions or pontificate on coming change. You need to do two things;

1. Develop engaging narratives and tailor to suit the people involved. It is rare that you can make something meaningful happen without the support of others (whether it’s sponsors, decision makers, engineers, collaborators or customers).
2. Create theories about the future state and current trajectory to define develop hypotheses about what you expect to see and the effect of your actions. Put these to test wherever possible.

Technique 9: Create engaging narratives

With this technique, your aim is to externalise and push the ideas to a wider circle of people. Seek to create a collective awareness and intelligence that enables ideas to spread, overcome inertia to change and guide decision making today. It might be something that can spur discussions at multiple levels, from executives to front-line staff and product managers. The best way to do this is to create narratives and models. These can take many forms.

Humans are natural storytellers and consumers. Narratives are central to how we teach, inspire and motivate. They help us make sense of the world and create a framework onto which we can hang our sense of meaning and identity.

Some forms this can take include:

• Developing a map: A map includes a description of the terrain, a position and a direction. Over time you will have a journey through the map.
• Building a model. This is simply a distillation of an understanding or assumption in a form that can be more easily digested than the whole, detailed reality. You would have actually been doing this all the way through, right from the beginning. You shouldn’t wait for a full understanding, instead continually creating and updating models to reflect observations and raise more questions.
• Plotting a journey. This can not only describe a series of events but the dynamics at play, the individuals involved, the interplay of elements and the changes that occur.
• Playing out an interaction or scene. This can range from acting out service experiences with Lego or sketching a storyboard of an interaction.
• Build a world. This can combine many of the factors above and requires effort to construct a broadly realised world with coherent qualities. It encourages you to combine top-down and bottom-up approaches. This is something that often makes science fiction writers skillful forecasters. You might cover questions such as; What might it feel like for the future me? What is life like for different groups of people? What are the rules of life and business in this world? You can repeatedly explore this world to add detail, uncover inconsistencies or explore possible secondary effects.

The following are some rules for the narratives you should seek to create;

• Make them visual wherever possible. Whether this is a model, map, storyboard, it broadens the potential audience and conveys a much higher rate of information and meaning.
• Tailor your message to your audience. You may need to create different versions. In any communication the thing that matters most is what the recipient understands. Therefore, you must tailor to their motivations, worldview and mental models.
• Regularly revisit and welcome examination of contradictions. In fact, when you notice ideas competing with each other it often leads to the formation of a better model. Being a good designer or strategist is to be happy to be wrong (or at least uncertain).
• Be wary of becoming too attached to the story and falling for the narrative fallacy. Recognise that it is playing an important role but don’t let the story become sacrosanct.
• Explain why the story matters. What do your audience or the people they care about (customers) stand to gain or lose?
• Create something memorable and shareable. If you hear someone actively retelling the story in a different setting, then you know you have made progress.
• Describe the new orientation of the organisation or people involved. One way to achieve this is to set out moments of reckoning or risk and the decisions made in response.

Finally; you may not be able to do all of this in one format.

Technique 10: Test and refine your ideas

The final technique to list is where you expose your ideas, narratives and models to the world to verify, adapt or reject. You can use the work you have done to define hypotheses about what you expect to see, how elements might interact and the effect of your actions. Put these to test wherever possible and recognise that in a rapidly changing environment you will be wrong a lot. But the more you are wrong and adapt, the more you will be right.

Some of the ways to expose and test your narratives and models include;

• Smash them with outside groups and points of view. This could include thinking about them through the lens of someone else’s problems or context. You should also systematically seek out people who inhabit different world to your own.
• Continuously categorise and update your models. Seek to both zoom in and out on them. Create links to other models and look for what breaks them.
• Run experiments, create prototypes and simulations. Get to something real as soon as possible to reveal unknowns and expand your field of learning. However, when forecasting over more distant horizons this may not always be possible.

In the most advanced organisations, this will be a continuous process to form and reflect on strategic orientation (‘Prospect’ in our framework). You will then define a portfolio of initiatives to define specific opportunities and put this into practice (Sow, Cultivate and Harvest). These Strategic Foresight techniques represent the first, important steps to re-framing your perspective and achieving sustainable advantage.

An overview of our strategy design framework (designfarmco.com.au)