Strategic Foresight
The Basic Idea
As the clock counted down to the new year on the 31st of December 2019, who would have thought we would soon find ourselves living through a devastating pandemic? Unexpected events happen all the time, yet we are consistently caught off guard when they occur. In times of rising uncertainty, there are tools that can help organizations better prepare themselves for the unexpected.
Strategic foresight is a systematic and planning-oriented approach to prepare for anticipated changes in the long run. It does so by using ideas about possible futures to develop action plans.
Also known as corporate foresight in the private sector, strategic foresight considers what opportunities and challenges could arise from a variety of plausible futures. These ideas about the future are then used to design potential solutions, which enable governments and businesses to prepare or implement strategies to mitigate future consequences.
Unlike forecasting, foresight explores the range of possible futures that may materialize. We can forecast something that has a high accuracy of probability, such as how long it will take to drive to work in the morning. A classic example is meteorologists, who use forecasting to make predictions about the weather based on past and present data. However, when we want to envision a future in which there is a high degree of uncertainty, it becomes far more difficult to forecast effectively. This is where strategic foresight comes in.
Rather than trying to accurately forecast future outcomes, the objective of strategic foresight is to investigate; it aims to expand consideration for a range of potential developments, opportunities and challenges that the future could present.1
Strategic foresight is the ability to create and maintain a high-quality, coherent and functional forward view, and to use the insights arising in useful organizational ways. For example to detect adverse conditions, guide policy, shape strategy, and to explore new markets, products and services. It represents a fusion of futures methods with those of strategic management.
– Richard Slaughter in his 1999 book, Futures for the Third Millennium: Enabling the Forward View
Theory, meet practice
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Key Terms
Foresight: The action of predicting what will happen or will be needed in the future.
Forecasting: Making a prediction based on events in the present and past, in addition to the observation of trends.
Scenario Planning: A strategic foresight tool that determines how an organization would respond to various scenarios in the future.
History
One of the first significant uses of strategic foresight dates back to the 1950s at the RAND Corporation, set up by the US Air Force after World War II.2 At this American global policy think tank, Herman Kahn used a strategic foresight tool called scenario planning. During this period, nuclear weapons had radically changed the landscape of war. Military strategists faced unprecedented levels of uncertainty. Kahn emphasized the need for strategists to consider multiple imagined futures.3 During the Cold War, he used scenario planning to develop and test the effectiveness of different military strategies.
In 1961, Kahn left RAND and founded the Hudson Institute, another think tank that addressed defense and economic concerns in the United States. During his time at the institute, Kahn shared his ideas with Pierre Wack,3 then an executive at Royal Dutch Shell. In the early 1970s, Wack became one of the first in the private sector to utilize strategic foresight.
Through the late 1960s, supply of oil was essentially unlimited and demand was growing quickly. Despite this optimistic outlook in the oil market, Wack used strategic foresight to prepare for multiple scenarios. In one of his imagined scenarios, the Middle East became a significant oil producer. Due to this strategic foresight, Royal Dutch Shell (Shell) anticipated the need to restrict oil supply.2,3 Even though Wack did not know when it would happen, Shell took steps early and stopped building new oil refineries. As the oil crisis of 1972 emerged, Shell was the only oil firm not overextended.
Despite it’s successful practical implications, it took until the 1990s for the concept to emerge in academic circles. Richard Slaughter, a future studies scholar, provided a formal definition of strategic foresight in his 1997 work, Developing and Applying Strategic Foresight. Slaughter wanted strategic foresight to be used as a decision-making tool in organizations and the broader public sector.4 Slaughter’s work was groundbreaking, as it streamlined previous, vague literature on the study of futures into a practical tool that could inform strategy and decision-making.4
People
Richard Slaughter
A British scholar and writer in the study of the future and strategic foresight. Slaughter’s work popularized the term “strategic foresight”, and streamlined it into the study of futures. Until then, the study of futures was largely ignored, as it lacked predictive validity due to it’s ambiguous definitions. In 2001, Slaughter went on to design and teach a Master of Strategic Foresight degree program, first taught at Swinburne University in Australia.5
Herman Kahn
An American mathematician and game theorist who came to prominence for his work as a military strategist trying to design a plan to prevent a nuclear war in the 1960s.2,3 He is often credited for popularizing the use of scenario planning, a strategic foresight tool used today in various fields, ranging from public policy to business strategy.3 Kahn was also one of the inspirations for the lead character in the Stanley Kubrick classic film Dr. Strangelove Or: How I Learned to Stop Worrying and Love the Bomb.
Pierre Wack
The Frenchman is renowned for introducing scenario planning in the private sector during his time as an executive at Royal Dutch Shell. After meeting Herman Kahn at the Hudson Institute and learning about scenario planning, Wack began to apply it in the private sector. He correctly considered a future where oil supply had to be restricted, successfully preparing Shell for two oil shocks.
Consequences
Strategic foresight has an especially important role to play in government policy-making. It allows governments to build their capacity to anticipate new opportunities or challenges, putting an emphasis on being proactive rather than reactive. This shift towards long-term, proactive thinking better prepares them for scenarios that may materialize in the future. Due to the various considerations evaluated by a strategic foresight team, an innovative approach to designing policy interventions can be encouraged. Strategic foresight also acts as a form of “future-proofing,” as the evaluation of a variety of plausible futures and policies can help stress-test existing policies, ensuring that they are capable of handling uncertainty.6
Strategic foresight can also allow governments to take advantage of emerging developments in the technology sector for the benefit of their citizens. Our society is in an age of rapid digitalization; personalization in machine learning can increase the efficiency of government services. This provides an opportunity for the government to create new jobs, but comes with risks. Unregulated surveillance, privacy concerns, and the increasing power of tech companies can all threaten democracies.7 Leveraging strategic foresight can help governments make informed, innovative policy decisions about the costs and benefits of technological change.
Controversies
Even though there are many advantages when governments incorporate strategic foresight, it is only used in depth by a few countries. Most organizations rightfully prioritize immediate issues over long-term, hypothetical concerns. For politicians influenced by the short-term electoral cycle, it may be hard to justify diverting scarce resources towards non-existent issues.8
To take advantage of strategic foresight, findings from scenario planning and other tools need to be converted into action quickly, whether to modify existing policies or take advantage of opportunities. Unfortunately, bureaucratic processes of governments usually result in an inflexible and time-consuming process for change to be implemented. By the time recommended actions are reviewed and implemented, critics argue that the benefits will have diminished greatly. This slow method of change can be a deterrent fully delving into the creative interventions required to fully take advantage of strategic foresight.8
Case Studies
Finland
By organizing regular discussions involving politicians, administrative officials, and experts, the Finnish government has been able to use strategic foresight to develop a “foresight mindset” in public sector decision-making, designed to prepare them for the next 50 years of uncertainty. One direct impact is their two-year universal basic income experiment, which was built from conversations about the future of work in foresight meetings. The experiment resulted in better mental and financial wellbeing for basic income recipients. By being prepared to implement a universal basic income policy, Finland is better prepared for an uncertain future of work where such policies could be needed.8
Strategic Foresight and COVID-19
Though the COVID-19 pandemic may have caught some by surprise, plenty of research anticipated a potential pandemic.9 One publication came from the World Economic Forum (WEF), who published a 2008 report highlighting the danger of a potential pandemic disease jumping from animals to humans with a high transmission and mortality rate. The report by the WEF further emphasizes the devastating impacts of a potential pandemic, as all countries would be affected due to global travel patterns.9
Countries with strategic foresight capabilities, such as the United States and the United Kingdom, received similar internal reports. Experts encouraged proactive action in improving pandemic preparedness, but stressed that it is impossible to predict exactly when a pandemic will arrive.9 The pandemic preparedness warnings were not taken seriously, with some experts highlighting groupthink as one of the many possible reasons.9 This is a result of policymakers sharing similar backgrounds and education. Advisors to the government of countries such as the United Kingdom also tend to be drawn from a handful of institutions, which potentially contributed to a narrow view that initially downplayed the disease’s potential impacts.9
Related TDL Content
Strengthen Your Strategy with Cyber Scenarios: Is your organization prepared for a cybersecurity attack? We have seen that breaches often happen, and proactive moves can avert massive breaches. This piece introduces a joint-effort report by The Decision Lab and Boston Consulting Group that explores scenario planning with strategic foresight experts Sanjay Khanna and Alan Iny.
Sources
- What is foresight? (n.d.). OECD. https://www.oecd.org/strategic-foresight/whatisforesight/
- Understanding strategic foresight: The history of scenario planning. (2017, March 14). Kalypso. https://kalypso.com/viewpoints/entry/understanding-strategic-foresight-the-history-of-scenario-planning
- Peter Scoblic, J. (2020, July 1). Learning from the future. Harvard Business Review. https://hbr.org/2020/07/learning-from-the-future
- Van der Laan, L. (2021). Disentangling strategic foresight? A critical analysis of the term building on the pioneering work of Richard slaughter. Futures, 132. https://doi.org/10.1016/j.futures.2021.102782
- History and development of Australian futures – Foresight international. (n.d.). Foresight International. https://foresightinternational.com.au/archive/history-and-development-of-australian-futures/
- Strategic foresight – Organisation for economic co-operation and development. (n.d.). OECD. https://www.oecd.org/strategic-foresight/#:~:text=Strategic%20foresight%20is%20a%20structured,better%20decisions%20and%20act%20now
- Why a government foresight program is crucial for future-centred Policymaking. (2020, August 20). Future Proof. https://www.futuresplatform.com/blog/why-government-foresight-program-crucial-future-centred-policymaking#:~:text=Strategic%20foresight%20can%20help%20governments,and%20future%2Dproof%20policymaking%20processes
- Looking long term: How governments can use strategic foresight. (n.d.). Centre For Public Impact (CPI). https://www.centreforpublicimpact.org/insights/governments-can-use-strategic-foresight
- Milojević, I. (2021). COVID-19 and pandemic preparedness: Foresight narratives and public sector responses. Journal of Futures Studies, 26(1), 1-18.
