Are You Ready for the Future?
Is your organization looking forward, or is it focused on the problems of the present and immediate short-term competition? Are you getting ready for a changing future?
Will your organization imagine new ways of doing business, build new capabilities, and set new standards of customer satisfaction? Is it alert to possible risks from unconventional rivals, new business models, changing demographics, and global opportunities and uncertainties?
It is not a question of operating lean and mean. Trimming jobs and cutting costs will not put you and your company into a front-running position for industry leadership of the future.
Here are three questions to ask senior management in order to evaluate readiness for the future:
What percentage of your time do you spend on external - rather than internal - issues? What are the implications of new technology affecting your industry?
Do you consider how the world will be different in five or ten years? Alternatively, are you more concerned with landing the next big contract and responding to competitors' pricing?
How much of your time is devoted to looking outward and forward? Are you consulting with colleagues to create a shared vision of the future based on risk evaluations as opposed to a personal and idiosyncratic view?
These questions were posed by Gary Hamel and C. K. Prahalad in their book Competing for the Future over ten years ago. It is even more relevant today.
Why Leaders Don't Look Ahead Many leaders don't want to look into the future because it is so unsettling. It means admitting that what they know today may be irrelevant and obsolete for the future.
When this happens, according to Hamel and Prahalad, ".the urgent drives out the important; the future goes largely unexplored; and the capacity to act, rather than the capacity to think and imagine, becomes the sole measure of leadership."
Looking at the Wrong Things This leads to focusing attention on internal issues of restructuring and reengineering to shore up present day business rather than creating the future.
According to Hamel and Prahalad, "Any company that succeeds at restructuring and reengineering, but fails to create the markets of the future, will find itself on a treadmill, trying to keep one step ahead of the steadily declining margins and profits of yesterday's business."
Too many companies are focusing on creating advantage through quality, time-to-market, and customer responsiveness. These are prerequisites for survival, not competitive advantages for the future.
Risks and Opportunities in an Uncertain World According to Paul A. Laudicina, managing director of A. T. Kearney's Business Policy Council, there is a way to look at future business environments and evaluate risks and opportunities that might evolve. Laudicina, in his new book World Out of Balance (McGraw Hill, 2005), argues that today's earth-shattering events are fundamentally different from those of previous eras of history.
Technologies are collapsing distance, and we now have unprecedented global interdependence. A disciplined strategy will assist corporate management to engage the world and seize opportunities.
Five Drivers of Change Laudicina's framework for looking at future business scenarios is based on his identification of five primary drivers of change:
1. Globalization 2. Demographics 3. The new consumer 4. Natural resources and the environment 5. Regulation and activism Large global companies such as Royal Dutch/Shell used to have sophisticated risk management and strategic planning departments to evaluate opportunities as well as vulnerabilities to social and political unrest, economic upheaval, and natural disasters overseas.
Corporate restructuring has taken the scissors to strategic planning departments. Rapidly expanding global opportunities has led many leaders to believe that careful planning isn't necessary. "Just do it" becomes the global manifesto. As a result, most companies today lack the means to identify and manage external risks.
Most companies can and should expand, as the most promising opportunities are located outside home markets. In order to spot and act on new opportunities and avoid emerging threats, however, it is necessary to consider the five drivers that are most likely to shape the business environment in the future.
To do this, take each driver and plot three scenarios, ranging from most conservative environment to most liberal. Evaluate the consequences to your business if each of these scenarios should evolve over the next five years. Plan for the consequences and be ready.
I would love to chat with you about planning, about change or anything else that you would like to discuss. Drop me note or give me a call at 312-842-4577.
Are You Ready for the Future? - To learn more about this author, visit Jerry Pinney's Website.
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