Developing organizational planning for future exploration and foresight

Anticipating change is not new to business but being able to manage it effectively is increasingly difficult. Corporate strategy has to change more often to keep up with market shifts, so organizational design and workforce planning must be more agile and adaptable.

Even the most expert business forecasters struggle to predict the future with confidence beyond 400 days. This makes it extremely challenging for organizations to develop strategies and plans that can withstand disruptive forces. They need to be prepared for a range of different scenarios and run experiments to test which responses would work.

For a detailed discussion around spotting market signals, building organizational flexibility and preparing for different outcomes, download the full report here.

forecasting the future with scenario planning

Organizations can use scenario planning to identify and make sense of many different of possibilities at the same time. Originally a response to growing complexity after the second world war, scenario planning follows the principle that good judgment is not about binary forecasts but assessing possible futures.

By generating possible outcomes and mapping out potential responses, scenario planning builds the capacity for organizations to adapt to changing circumstances and enables leaders to prepare for unpredictable situations.

Scenarios should take account of soft data such as cultural differences across markets, as well as hard data. Asking questions that highlight where the current business plan is vulnerable, what circumstances would throw the organization off course, and what would have to happen for a particular scenario to come true is a key art of scenario planning.

From ‘just-in-time’ to just-in-case’ planning

Since just-in-time manufacturing first emerged in the 1970s, the underlying principles have steadily permeated all aspects of modern business. Efficiency works well when systems are reliable and predictable. But when adversity and unforeseen circumstances arise, it quickly breaks down.

In today’s climate of uncertainty, disruption and complexity, businesses need to be resilient in the face of change, which calls for a different approach. Just-in-case planning involves actively preparing for many different scenarios and making targeted investments in advance for when the situation changes rapidly.

This approach asks questions such as just how fast a particular scenario might take hold, how high the barriers are to entering a new market, or how much it will cost to prepare for the most likely eventualities. It means trading off costs in preparing for a scenario that never comes about against leaving it so late that an opportunity is missed, or damage is unavoidable.

The power of experiments

When it’s impossible to predict events further than a few months out, you must have other ways of anticipating what might happen and testing out which strategies would work. When it comes to existential threats, it’s risky to put your faith in a single plan. This is where experiments come into play.

Experimentation is an ideal response to complex, unpredictable situations, as it suggests relatively low-risk actions that can give clues about what’s coming and what to do. Experiments allow us to execute and learn at the same time. They’re a pragmatic way of testing out the future. They allow us to develop and test hypotheses about how customers, markets, and competitors are evolving.

When designing experiments, it’s important to carefully examine why certain outcomes occurred, particularly if the experiment failed. Success is about finding the right idea at the right time, and sometimes a good idea emerges before the ecosystem is ready to support it.

Designing organizations for foresight and responsiveness

If your market is being disrupted, the chances are someone in the organization already knows about it. The challenge is to make sure the organizational structure facilitates that information reaching decision makers, who can act on it in a timely way.

Organizations that are open to their external environment feel different in terms of culture and leadership behaviours. They also look different in terms of their organizational design. CRF’s research on the design of agile organizations found those that are more capable of sensing and responding to change tend to share some common features:

They maximise the ‘surface area’ that’s in touch with the outside world

Being able to pick up on weak market signals relies on strong connections with the external environment. Responsive organizations do this in a number of ways.

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They explicitly design the organization to allow for collaboration across formal boundaries and silos

Formal organizational structures often don’t reflect how work actually is done. Instead, focusing on a ‘lateral’ design enables organizations to respond quickly to strategy shifts without having to restructure.

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They create new organizational forms that allow emerging businesses to thrive

Shareholder demands and economic conditions mean organizations have to scale and maintain operational efficiency while simultaneously finding new sources of growth through innovation.

However, organizations usually have tight controls and governance, clear hierarchies, and rigid processes, whereas innovation relies on a more fluid approach to organizational structure and the dynamic deployment of resources.

One solution is to establish separate organizational units for emerging businesses, which operate independently and may be governed by different processes.

For a more detailed explanation of these three qualities, download the full report

Building future-focused organizations

Vigilance and adaptability are not nice-to-haves: the future survival of most organizations depends on them. Many of today’s accepted business practices are no longer fit for purpose. For the last hundred years, we’ve been focused on turning business management into a science, where everything is measurable and optimizable.

But in today’s complex environment, this may be the wrong thing to do. We need business people who are curious, observant explorers and makers of meaning. Business practices that focus on planning as a numbers-driven process run by the finance function have to change. Preparedness may be more valuable than planning. Five-year plans are most likely a waste of time.

Instead of trying to predict the future, we would do better to sense and act on what we see. As Satya Nadella said to a Microsoft employee who questioned why it was hard to get things done, perhaps we should just get out there and make the future for ourselves.

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