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Feb 1 / heathgross

How Top Companies Use Competitive Intelligence to See the Future

seeing the future of your company

illustration by Cat Scott

What if you had a crystal ball that would allow you to look into the future? Whether you are an entrepreneur or an executive of a Fortune 500 company, the idea of being able to see three, five or ten years into the future would be invaluable. Think about this: Groupon did not exist three years ago. Five years ago no one had heard of Facebook. Ten years ago Yahoo was the leading search engine. If you build a business strategy based on a static view of the market, you are likely to get passed by your competition.

Well, I can’t sell you a crystal ball, but I can tell you how you can build one.

About six years ago I began to study and explore the concepts of Foresight Strategy, also known as Future Studies or (my favorite) Futurism. What fascinated me about this odd, often overlooked, discipline was the very scientific approach that is uses to gain insight into the “future.”

To be clear, I am not talking the Jetsons or Bladerunner here. I am talking about a systematic approach that helps us envision what the future might look like. We have all seen the Popular Mechanics magazines with city-size bio-domes and flying cars. While images like these might fall under the umbrella of futurism, Foresight Strategy is more focused on the business applications of the discipline rather than the fantastical view of the Matrix or 2001 Space Odyssey.

Foresight Strategy is an interdisciplinary field focused on postulating possible, probable, and preferable futures and the worldviews and myths that underlie them. There is a debate as to whether this discipline is an art or science, though I would argue that it is a little of both.

Three factors usually distinguish futures studies from the research conducted by other disciplines (although all disciplines overlap, to differing degrees).

  1. First, futures studies often examine not only possible but also probable, preferable, and “wild card” futures.
  2. Second, futures studies typically attempts to gain a holistic or systemic view based on insights from a range of different disciplines.
  3. Third, futures studies challenge and unpack the assumptions behind dominant and contending views of the future.

[wiki paraphrase]

It does not take much imagination to see how this discipline could be leveraged to impact long term strategic planning for businesses. Still not convinced? Watch the following video and you will be.

These ads were produced in 1993, a full decade before any of these technologies were available. How did AT&T do it? I doubt very seriously that it was the result of a bunch of ad boys sitting around in a room dreaming up jetpack, flying-car scenarios. No, more than likely the creative team did their research. They likely turned to a number of technology experts and thought leaders and asked, “What new technologies do you think the next ten years will bring?” They may have even looked around at what technologies were being developed in their own labs, at the universities and, perhaps, even by their competition.

Foresight Strategy is not about dreaming up ideal futures, it is about looking at historical data and then using predictive analysis to develop possible future scenarios. I use the term “possible” because there are far too many variables to truly “predict” what will happen. However, by developing a series of possible and even probable scenarios, decision makers can build long-term contingent strategies.

In addition to possible and probable futures, many futurists support the concept of preferred futures. The underlying belief of preferred futures is that the future can be influenced by our present actions, which is good news for businesses. For instance, the possible and probable future of a particular market is based on a number of variables including technology, politics, macro and micro economics, etc. However, the preferred future would be a scenario that is more tailored to the desired outcome of, say, a particular business. The preferred future scenario would be presented with variable outcomes that would need to be aligned in order for the preferred future to be achieved.

Think of this as cracking a safe: All of the pins must be aligned in order to open the door. Knowing which variables need to be influenced helps strategic planners develop the short-term tactical steps that need to occur in order to achieve the long-term goals. These variables are often referred to in business strategy jargon as “strategic imperatives.”

While I am a fan of the idea behind foresight strategy, I find that the methods used are sometimes a bit nearsighted. Particularly, I was surprised, and admittedly disappointed, to learn how many foresight strategists relied largely on historical data. My undergraduate degree was in History, and my graduate work included quite a bit of statistics and trend analysis, so I certainly can appreciate the ability to build predictive models using historical data. Yet I can’t help but feel that if we base our foresight on hindsight we end up with less than 20/20 when it comes to envisioning the future.

How To Build A Better Crystal Ball

  • Don’t rely solely on historical data.
    I have found that if you want to build a more accurate view of the future, a key element is to talk to those that will help shape the future. If I am working with a client to help them develop a foresight strategy focused on a particular technology or drug market, I am going to make sure that we are interviewing the people who will impact that market.
  • Perform competitive intelligence.
    As mentioned previously, Foresight Strategy seeks to develop a holistic view, so I will be sure to conduct competitive intelligence and qualitative research, talking to regulators, thought leaders, competitors, suppliers, vendors and customers. Each one of these groups will have an impact on the future of the market. What is more predictive than someone telling you what their long-term strategy is? No amount of historical data can equal the value of good qualitative, primary based research.
  • Analyze qualitative findings
  • Test qualitative data against historical data (This Part Gets A Little Nerdy)
    Once I have analyzed the qualitative findings, I can test those results against the predictive outcomes generated from the historical data. Using this approach provides a more realistic balance between the subjective market view and the more objective trends in data.

Keep in mind the goal is not to generate a single predictive view of the market, but rather to build a series of probable futures. The strategy in Foresight Strategy occurs when we develop short and long-term plans that address the various futures, as well as a plan to influence the variables which will enable us to achieve the preferred future.

Think of it this way: it’s not so much a crystal ball, as it is a crystal cube, each side of the cube representing a possible future, like dice. The objective of Foresight Strategy is to develop a plan for each side of the cube, so regardless of how the die lands, you are prepared for the outcome. Developing and pursuing a preferred future, then, is like playing with a loaded die.

In summary: A good crystal ball gives you foresight, built not on hindsight, but on qualitative research and competitive intelligence that provides true predictive insight.

Look for a follow-up post I plan to call “How I Predicted the Housing Market Bust: But No One Cared” as an example of the predictive benefits of qualitative research.

How has Foresight Strategy helped your company?

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