Chapter 7. The Do Loop – The Eight Skills of Adaptive Foresight

Skill 4. Strategy (Decisive and “re-convergent” thinking).

As we will see at the end of this chapter, executing adaptive strategy (Skills 4 and 5) is the heart of the Do loop. Doing these two skills well is most centrally what we want foresight to help us do. But in a complex and evo devo world, it takes a lot to stay adaptive. We’ve discussed thirteen specialty practices so far, activities that get us to the point of making good strategy, and now we’ll look at two more, for creating strategy itself.

The first specialty we will address in the strategy skill is Analysis & Decision Support. This set of specialties helps us generates and compares a variety of future action options for the organization, using some explicit criteria. One of the more technical versions of this, used commonly by big companies like Boeing and GE, is real options analysis, which they use prior to making big financial commitments.

Strategic analysis is used to make assumptions about how a system works, break the system into conceptual parts, and do systems thinking about or model how those parts interact, and their relevance to organizational objectives. There are a vast range of analytical methods and communities applicable to strategy, including those from business, economics, engineering, computing, politics, intelligence, and others.

The Institute for Operations Research and the Mgmt Sciences (INFORMS) is a leading practitioner community for operations research, a technical and quantitative approach to process optimization. This specialty is called operations research in engineering, and is known in business as management science, and thus OR/MS is its general label. For problems that can be well defined, which are only a subset of problems, OR/MS and other optimization methods can get us to the “right” strategy, at least for the chosen objectives of the firm. But whether those objectives are the best ones for a particular firm in a particular context is always an intuitive bet on the part of the leaders, and will ultimately be determined by the selective environment. Thus while this field can give us precise and technical answers, the effectiveness of those answers is another question entirely. We must be careful not to use technical approaches to the exclusion of others, in any strategic decision.

Decision support, is another general term for methods and technologies that help the firm make choices among known options. It is very similar to strategic analysis, but more focused on how strategy and other processes help us do better decisionmaking. It seems smaller and less developed than analysis. The European Working Group on Decision Support Systems (EWG-DSS), and their conference, Decision Support System Technology, are a useful place to get help with decision modeling and the use of technology for better decisionmaking.

Again the ultimate goal for any firm is to have a continually adaptive strategy and execution, even as environmental conditions constantly change. Most business problems, being complex or poorly structured and defined, have no obvious “right” answer. It is with those problems where experience, cognitive diversity, and good use of the Eight Skills can really help the firm adapt.

The Strategy & Planning specialty begins with activities like Values determination and Visioning (aspirational thinking that results in motivating envisioned future states, and leadership commitment to those visions). Some foresight consultancies, like the Institute for Alternative Futures, have become well known for aspirational (vision- and values-driven) strategy work. When comparing visions to scenarios, which immerse the client in options, but don’t necessarily ignite passions, IAF president Clement Bezold likes to say “Visions are futures for the heart; scenarios are futures for the head.” Finding the noble, motivating vision can be incredibly energizing for the team, as we’ve seen in many a startup and independent business unit. Think of the Bandley III, the Macintosh unit, under Steve Jobs at Apple in 1983.

Steiber (2014)

Steiber (2014)

Strategy also includes Framing (determining the scope, depth, and methods of strategy and foresight work), an activity further discussed in Thinking About the Future (2013). Next, strategy work involves Prioritization and Goalsetting (for example, using SMART goal criteria). Determining the firm’s objectives and key results (OKRs, measurable goals) with broad stakeholder engagement is one of the most difficult yet empowering activities in strategic management. Google uses OKRs extensively to manage their strategic innovation initiatives. Steiber’s The Google Model (2014) is great new book providing details on their process.

Bradford & Duncan (2000)

Bradford & Duncan (2000)

For a great article describing how executives learn strategic thinking over their career, in a process of psychological development, or fail to learn it, see Ellen Goldman’s Strategic Thinking at the Top (free), MIT Sloan Management Review, Summer 2007. For an excellent history of strategy consulting, and how strategy is used in modern corporations, see Walter Kiechel’s Lords of Strategy (2010).

The Planning specialty in Strategy & Planning is often thought of as the last step before action, and the culmination of strategy and analysis. Whether simple or detailed, formal or informal, good plans help us to coordinate our resources and energies toward desired outcomes.  Strategic planning has been used since the 1960s by larger firms, but as Lou Gerstner says in his classic “Can strategic planning pay off?”, McKinsey Quarterly (1973), and Henry Mintzberg explains in The Rise and Fall of Strategic Planning (2000), it is very easy for a firm to over-plan, to use plans as a poor excuse for action, and to create plans that are not widely internalized or executed as written, even in the early steps. Bradford and Duncan’s Simplified Strategic Planning (2000) gives advice on how to avoid these traps with brief, fast, and continuous high-utility planning.

A firm’s plans may or may not involve broad foresight. Sometimes anticipation isn’t possible, and one instead needs strategic agility, moving as quickly as possible from strategy to action. We’ve previously mentioned several books helpful to that approach. At other times, when facing big bets and costly decision points, and when a little reflection time can be found prior to the decision, the level of ideation (alternative futures generation), anticipation and strategy in the plan can be critical. Did the team explore the most relevant probable and possible futures related to objectives as part of strategic planning? If not, the plan will be blind to the environment, and may have little long-term value.

Fitness Landscape (A fitness variable (e.g. preference, growth, profit) and a search space (strategic options)

Fitness Landscape (A fitness variable (e.g. preference, growth, profit) and a search space (strategic options)

In the Evo Devo model, a good practice guideline for Strategic Management is to learn the landscapes. The interactions of actors that are subject to both probable and convergent futures (development) and possible and divergent futures (evolution) can be roughly graphed as an adaptive landscape of constantly shifting peaks and valleys on any adaptive variables (e.g. efficiency, performance, preference, product features, growth, profit), as in the picture at right. Figuring out which variables matter the most is today an art. As Fleming and Sorenson note in Navigating the Technology Landscape of Innovation, MIT Sloan Management Review, winter 2003, leaders can often see only a little way out on their fitness landscapes from their current location (e.g. their current cost basis, product features, and price). Gaining a better view of all the possibilities available to them, and whether any would be more adaptive for the dominant goals and strategy presently being executed (e.g. growth, profitability, quality), requires careful market and technical research, followed by good ideation.

Even when quantitative graphs aren’t available to us, the landscape metaphor still helps us mentally visualize our strategy. At any point in time, some individuals, organizations, and markets will be adapting better than others (climbing adaptive peaks, on various landscapes), and some will be losing out (falling into valleys). The lay of the relevant landscapes at any time can always be used to guide our strategies. Leaders need to know what customers think of their products and policies relative to competitors (customer preference landscape), where they are in cash flow and sales momentum (financial landscape), which of their competitors are doing well and doing poorly (competitiveness landscape), and who their best potential allies are (strategic alliance landscape). For more on the latter, see Doz and Hamel’s Alliance Advantage, 1998.

If learning is foresight’s first and most fundamental skill, and strategy is the heart of foresight, and then learning the relevant landscapes is the heart of strategy. Every manager’s central goal is to adapt enough to survive, to keep successfully riding the tiger of change. Key to that survival is knowing where the peaks and valleys are on all the relevant landscapes, then developing good competitive and cooperative strategy, analysis, and plans to navigate the present, and capitalize on what your team can see around you.

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