Why Strategic Plans Need Multiple Futures
When members of Lowe’s Innovation Labs first began talking with the home improvement retailer’s senior executives about how disruptive technologies would affect the future, the presentations were well received but nothing stuck.
“We’d give a really great presentation and everyone would say, ‘Great job,’ but nothing would really happen,” says Amanda Manna, then head of narratives and partnerships for the lab.
The team realized that it needed to ditch the PowerPoints and try something radical. The team’s leader at the time, Kyle Nel, is a behavioral scientist by training. He knows people are wired to receive new information best through stories. Sharing far-future concepts through narrative, he surmised, could unlock hidden potential to drive meaningful change.
So Nel hired science fiction writers to pen the future in comic book format, with characters and a narrative arc revealed pane by pane.
The first storyline, written several years before Oculus Rift became a household name, told the tale of a couple envisioning their kitchen renovation using virtual reality headsets. The comic might have been fun and fanciful, but its intent was deadly serious. It was a vision of a future in which Lowe’s might solve one of its long-standing struggles: the approximately US$70 billion left on the table when people are unable to start a home improvement project because they can’t envision what it will look like.
When the lab presented leaders with the first comic, “It was like a light bulb went on,” says Manna. “Not only did they immediately understand the value of the concept, they were convinced that if we didn’t build it, someone else would.”
Today, Lowe’s customers in select stores can use the HoloRoom How To virtual reality tool to learn basic DIY skills in an interactive and immersive environment.
Other comics followed and were greeted with similar enthusiasm – and investment, where possible. One tells the story of robots that help customers navigate stores. That comic spawned the LoweBot, which roamed the aisles of several Lowe’s stores during a pilot program in California and is being evaluated to determine next steps.
And the comic about tools that can be 3D-printed in space? Lowe’s partnered with Made in Space, which specializes in making 3D printers that can run in zero gravity, to install the first commercial 3D printer in the International Space Station, where it was used to make tools and parts for astronauts.
The comics are the result of sending writers out on an open-ended assignment, armed with trends, market research, and other input, to envision what home improvement planning might look like in the future or what the experience of shopping will be in 10 years. The writers come back with several potential story ideas in each area and work collaboratively with lab team members to refine it over time.
The process of working with writers and business partners to develop the comics helps the future strategy team at Lowe’s, working under then Chief Development Officer Richard D. Maltsbarger, to inhabit that future. They can imagine how it might play out, what obstacles might surface, and what steps the company would need to take to bring that future to life.
Once the final vision hits the page, the lab team can clearly envision how to work backward to enable the innovation. Importantly, the narrative is shared not only within the company but also out in the world. It serves as a kind of “bat signal” to potential technology partners with capabilities that might be needed to make it happen, says Manna. “It’s all part of our strategy for staking a claim in the future.”
Companies like Lowe’s have realized that standard ways of planning for the future won’t get them where they need to go. The problem with traditional strategic planning is that the approach, which dates to the 1950s and has remained largely unchanged since then, is based on the company’s existing mission, resources, core competencies, and competitors.
Yet the future rarely looks like the past. What’s more, digital technology is now driving change at exponential rates. Companies must be able to analyze and assess the potential impacts of the many variables at play, determine the possible futures they want to pursue, and develop the agility to pivot as conditions change along the way.
This is why planning must become completely oriented toward – and sourced from – the future, rather than from the past or the present. “Most of us apply present-forward thinking to predict what is next. But the present is too noisy,” says Bob Johansen, distinguished fellow at the Institute for the Future. “A future-back perspective is what’s required in an increasingly volatile, uncertain, chaotic, and ambiguous work in order to provoke insight.”
Inching forward won’t cut it anymore. That has become painfully clear as companies were caught flat footed by the COVID-19 crisis. Futurists like Johansen had forecast a global pandemic as early as 2009. Yet few leaders were prepared for the impact because they failed to imagine and prepare for a situation they’d never encountered before.
Half of the S&P 500 organizations will drop off the list over the next decade, according to research company Innosight. The reason? They can’t see the portfolio of possible futures, they can’t act on them, or both. Indeed, when SAP conducts future planning workshops with clients, we find that they usually struggle to look beyond current models and assumptions and lack clear ideas about how to work toward radically different futures.
Companies that want to increase their chances of long-term survival are incorporating three steps: envisioning, planning for, and executing on possible futures. And doing so all while the actual future is unfolding in expected and unexpected ways.
Those that pull it off are rewarded. The most recent report from the Strategic Foresight Research Network (SFRN) revealed that vigilant companies (those with the most mature processes for identifying, interpreting, and responding to factors that induce change) achieved 200% greater market capitalization growth and 33% higher profitability than the average, while the least mature companies experienced negative market-cap growth and had 44% lower profitability.
Looking outside the margins
“Most organizations lack sufficient capacity to detect, interpret, and act on the critically important but weak and ambiguous signals of fresh threats or new opportunities that emerge on the periphery of their usual business environment,” write George S. Day and Paul J. H. Schoemaker in their book Peripheral Vision.
But that’s exactly where effective future planning begins: examining what is happening outside the margins of day-to-day business as usual to peer into the future.
Business leaders who take this approach understand that, despite the uncertainties of the future, there are drivers of change that can be identified and studied and actions that can be taken to better prepare for – and influence – how events unfold.
That starts with developing foresight, typically a decade out. Ten years, most future planners agree, is the sweet spot. “It is far enough out that it gives you a bit more latitude to come up with a broader way to the future, allowing for disruption and innovation,” says Brian David Johnson, professor of practice at Arizona State University’s School for the Future of Innovation in Society and futurist and fellow at Frost & Sullivan. “But you can still see the light from it.”
The process involves gathering information about the factors and forces – technological, business, sociological, and industry or ecosystem trends – that are effecting change to envision a range of potential impacts.
Seeing new worlds
Intel, for example, looks beyond its own industry boundaries to envision possible future developments in adjacent businesses in the larger ecosystem it operates in. In 2008, the Intel Labs team, led by anthropologist Genevieve Bell, determined that the introduction of flexible glass displays would open a whole new category of foldable consumer electronic devices.
To take advantage of that advance, Intel would need to be able to make silicon small enough to fit into some imagined device of the future. By the time glass manufacturer Corning unveiled its ultra-slim, flexible glass surface for mobile devices, laptops, televisions, and other displays of the future in 2012, Intel had already created design prototypes and kicked its development into higher gear. “Because we had done the future casting, we were already imagining how people might use flexible glass to create consumer devices,” says Johnson.
Companies may look to sociologists or behaviorists who have insight into the needs and wants of people and how that influences their actions. Some organizations bring in an applied futurist, skilled at scanning many different forces and factors likely to coalesce in important ways.
Do you need a futurist?
Most organizations need an outsider to help envision their future. Futurists are good at looking beyond the big picture to the biggest picture.
Business leaders who want to be better prepared for an uncertain and disruptive future will build future planning as a strategic capability into their organizations and create an organizational culture that embraces the approach. But working with credible futurists, at least in the beginning, can jump-start the process.
“The present can be so noisy and business leaders are so close to it that it’s helpful to provide a fresh outside-in point of view,” says Johansen.
To put it simply, futurists like Johansen are good at connecting dots – lots of them. They look beyond the boundaries of a single company or even an industry, incorporating into their work social science, technical research, cultural movements, economic data, trends, and the input of other experts.
They can also factor in the cultural history of the specific company with whom they’re working, says Arizona State University’s Johnson. “These large corporations have processes and procedures in place – typically for good reasons,” Johnson explains. “But all of those reasons have everything to do with the past and nothing to do with the future. Looking at that is important so you can understand the inertia that you need to overcome.”
One thing the best futurists will say they can’t do: predict the future. That’s not the point. “The future punishes certainty,” Johansen says, “but it rewards clarity.” The methods futurists employ are designed to trigger discussions and considerations of possibilities corporate leaders might not otherwise consider.
You don’t even necessarily have to buy into all the foresight that results, says Johansen. Many leaders don’t. “Every forecast is debatable,” Johansen says. “Foresight is a way to provoke insight, even if you don’t believe it. The value is in letting yourself be provoked.”
External expert input serves several purposes. It brings everyone up to a common level of knowledge. It can stimulate and shift the thinking of participants by introducing them to new information or ideas. And it can challenge the status quo by illustrating how people and organizations in different sectors are harnessing emerging trends.
The goal is not to come up with one definitive future but multiple possibilities – positive and negative – along with a list of the likely obstacles or accelerants that could surface on the road ahead. The result: increased clarity – rather than certainty – in the face of the unknown that enables business decision makers to execute and refine business plans and strategy over time.
Plotting the steps along the way
Coming up with potential trends is an important first step in futuring, but even more critical is figuring out what steps need to be taken along the way: eight years from now, four years from now, two years from now, and now. Considerations include technologies to develop, infrastructure to deploy, talent to hire, partnerships to forge, and acquisitions to make. Without this vital step, everybody goes back to their day jobs and the new thinking generated by future planning is wasted says Steve Brown, a futurist and consultant. To work, the future steps must be tangible, concrete, and actionable.
Organizations must build a roadmap for the desired future state that anticipates both developments and detours, complete with signals that will let them know if they’re headed in the right direction. Brown works with corporate leaders to set indicator flags to look out for on the way to the anticipated future. “If we see these flagged events occurring in the ecosystem, they help to confirm the strength of our hypothesis that a particular imagined future is likely to occur,” he explains.
For example, one of Brown’s clients envisioned two potential futures: one in which gestural interfaces took hold and another in which voice control dominated. The team set a flag to look out for early examples of the interfaces that emerged in areas such as home appliances and automobiles. “Once you saw not just Amazon Echo but also Google Home and other copycat speakers, it would increase your confidence that you were moving more towards a voice-first era rather than a gesture-first era,” Brown says. “It doesn’t mean that gesture won’t happen, but it’s less likely to be the predominant modality for communication.”
How to keep experiments from being stifled
Once organizations have a vision for the future, making it a reality requires testing ideas in the marketplace and then scaling them across the enterprise. “There’s a huge change piece involved,” says Frank Diana, futurist and global consultant with Tata Consultancy Services. “That’s the place where most businesses will fall down.”
Many large firms have forgotten what it’s like to experiment in several new markets on a small scale to determine what will stick and what won’t, says René Rohrbeck, professor and associate dean for corporate relations at the Aarhus School of Business and Social Sciences. Companies must be able to fail quickly, bring the lessons learned back in, adapt, and try again.
Lowe’s increases its chances of success by creating master narratives across several different areas at once, such as robotics, mixed-reality tools, on-demand manufacturing, sustainability, and startup acceleration. The lab maps components of each by expected timelines: short-, medium-, and long-term. “From there, we’ll try to build as many of them as quickly as we can,” says Manna. “And we’re always looking for that next suite of things that we should be working on.” Along the way, certain innovations, like the HoloRoom How-To, become developed enough to integrate into the larger business as part of the core strategy.
One way Lowe’s accelerates the process of deciding what is ready to scale is by being open about its nascent plans with the world. “In the past, Lowe’s would never talk about projects that weren’t at scale,” says Manna. Now the company is sharing its future plans with the media and, as a result, attracting partners that can jump-start its realization.
Seeing a Lowe’s comic about employee exoskeletons, for example, led Virginia Tech engineering professor Alan Asbeck to the retailer. He helped develop a prototype for a three-month pilot with stock employees at a Christiansburg, Virginia store.
The high-tech suit makes it easier to move heavy objects. Employees trying out the suits are also fitted with an EEG headset that the lab incorporates into all its pilots to gauge unstated, subconscious reactions. That direct feedback on the user experience helps the company refine its innovations over time.
Make the future part of the culture
Regardless of whether all the elements of its master narratives happen, Lowe’s has already done something important: it has embedded future thinking into the culture of the company.
Companies like Lowe’s constantly scan the environment for meaningful economic, technology, and cultural changes that could affect its future assessments and plans. “They can regularly draw on future planning to answer challenges,” says Rohrbeck. “This intensive, ongoing, agile strategizing is only possible because they’ve done their homework up front and they keep it updated.”
It’s impossible to predict what’s going to happen in the future, but companies can help to shape it, says Manna of Lowe’s. “It’s really about painting a picture of a preferred future state that we can try to achieve while being flexible and capable of change as we learn things along the way.”