Business

The world’s top companies are using strategic foresight — you should too

In an uncertain world, strategic foresight is an indispensable tool for top organizations.

In an uncertain world, strategic foresight is an indispensable tool for top organizations. Image: Getty Images/iStockphoto

Jan Oliver Schwarz
Professor of Strategic Foresight & Trend Analysis, Head of Institute, Bavarian Foresight Institute, Technische Hochschule Ingolstadt
Bernhard Wach
Professor of Entrepreneurship and Business Administration, Munich University of Applied Sciences
Theresa Schropp
Research Assistant, Bavarian Foresight Institute, Technische Hochschule Ingolstadt
Fabian Buder
Head, Future and Trends Research, Nuremberg Institute for Market Decisions
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  • Strategic foresight is a set of approaches that help explore, imagine and anticipate the future in an open but structured way.
  • Research suggests as many as 90% of top organizations are already using this method in their business strategy.
  • In an increasingly unpredictable world, carrying out strategic foresight is becoming more important — and more difficult.

In 2023, simply reacting to short-term developments in the business environment as they come is not adequate — companies must look ahead to potential challenges on and beyond the horizon. To do this, strategic foresight is essential.

Strategic foresight helps organizations anticipate long-term change in the business environment to make better decisions now. It is a set of approaches that help explore, imagine and anticipate the future in an open but structured way. Organizations can identify and explore emerging challenges and opportunities based on multiple signals and drivers of change shaping the future.

With increasing uncertainty and complexity in the business environment, strategic foresight has become more important for companies. And the practice is becoming increasingly widespread.

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Capitalising on strategic foresight

A 2020 survey of senior management executives of the largest European and US companies, conducted by the Nuremberg Institute of Market Decisions (NIM), concluded that more than 90% had foresight activities in their organizations, to varying degrees. About 34% of the companies reported that a separate business unit was responsible for strategic foresight, while the majority reported that strategic foresight activities were part of other departments or an additional responsibility of managers.

Strategic foresight is a common practice, but companies with separate business units for foresight are still rare.
Strategic foresight is a common practice, but companies with separate business units for foresight are still rare. Image: Nuremberg Institute for Market Decisions

Strategic foresight is widespread and established among large companies, at least in the US and Europe. However, its implementation and how it’s embedded into workflows and projects varies significantly.

When taking a closer look at the practice of strategic foresight, we can identify room for improvement. While it appears that more than every second manager finds trend reports helpful or even very helpful in decision-making, this number drops sharply for deliverables such as scenario reports, the work of internal foresight experts and future workshops or other workshop formats.

Trend reports are an easy and useful way organizations can communicate foresight insights. Some trends are often familiar to managers and it is often natural to examine them in a management meeting.

However, things get much more complicated if, for example, one tries to initiate a discussion about the future of one’s own industry, while at the same time pointing out that the future cannot be predicted and that a scenario report will most likely contain several alternative pictures of the future.

From a decision maker’s perspective, that may lead to more questions than the report answers: about the interpretation of alternative scenarios, the right way to prepare for several alternative futures and maybe even how doing so can be possible at all. Being able to make productive use of foresight information is a capability in itself; one that merits proper training and requires some experience.

A minority of management decision-makers consider the deliverables of foresight to be helpful for business decision with strategic implications.
A minority of management decision-makers consider the deliverables of foresight to be helpful for business decision with strategic implications. Image: Nuremberg Institute for Market Decisions

Strategic foresight for better decision-making

Research suggests that decision-makers are better at dealing with an uncertain environment when they have been trained in this type of thinking. In this context, leadership training should focus on making the right decisions under uncertain conditions, challenging one’s own assumptions and those of others and paying attention to weak signals of change — “peripheral vision.”

Using foresight for business decisions involves more than just reading reports. This is particularly true when foresight deliverables raise existential questions for an organization.

To use scenarios effectively for decision-making, decision-makers need to shift from a reporting logic to an intervention logic. This approach has also been described as an organizational intervention because it requires decision-makers to be part of the process of discussing relevant trends and developing scenarios for the future. In other words, foresight demands decision-makers’ commitment, attention and engagement.

The assumption is that by participating in the foresight process, decision-makers will learn more about the future (or alternative futures), find a common language among members of the leadership team to discuss challenges and collectively challenge assumptions that are commonly taken for granted. These include assumptions about future changes and, perhaps even more importantly, about what is considered stable in the decision-makers’ industries. This, of course, is a much more difficult process than handing over a trend report.

Leveraging foresight

To be able to better leverage foresight for strategic planning and decision-making in markets, companies need to answer the following questions:

1. How are deliverables from foresight activities used in decision-making processes? What formats work for you and your organization in disseminating foresight insights, and why?

2. What keeps decision makers from integrating foresight deliverables in their processes?

3. How could the corporate standing of foresight be strengthened? Have you tried developing decision-making into the process of generating foresight in- sights? What were the obstacles you faced, and how could they have been overcome?

By considering and answering these questions, any organization — public, private or anything else — can navigate this new era of instability and unpredictability with more confidence.

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