When Gary Hamel and C.K. Prahalad attested in 1994 that
“on average senior management only devotes 3% of their time to building a corporate perspective on the future”,
there were few that were surprised by that claim. Indeed at that time their article seemed to resonate well with the Zeitgeist. Managers were frequently blamed for excessive short-termism, for overly engaging in cost cutting, and for caring more about short-term shareholder value than sustainable growth.
High mortality of firms (reported for example by Christian Stadler or Arie de Geus) and recent spectacular failures such as Kodak or Nokia, however suggest that firms today, should have an interest in building capabilities that systematically promote their long-term competitiveness.
Survey results
However a recent survey led by Dr. Micheal König, of the Vienna University of Economics and Business, seems to suggest the opposite. The authors investigated the maturity of strategic foresight systems in a sample to 496 industrial firms in Austria. They differentiated into the categories
- No systematic strategic foresight
- Generation 1 systems, based on indicators and extrapolations
- Generation 2 systems, based on indicators and causality analysis
- Generation 3 systems that allow the identification of opportunities and threats on the basis of weak signals.
- Generation 4 integrated strategic foresight systems that systematically translate future insights into managerial actions
The survey results show that
only 2,4 % of the firms have integrated strategic foresight systems.
That is particularly worrying as our own research has repeatedly emphasized that strategic foresight activities, which are neither integrated with managerial processes (such as strategic or innovation management) nor through tight personal networks, will in most cases only produce reports that have little or no impact in their organization.
The study also offers some insights into the key reasons behind such a low implementation rate. The authors report that only 18% of firms believe that having no strategic foresight capabilities will result in a high risk. Such a perception is however (as we found in our case studies) quickly altered once a disruption has occurred in the industry.
Integrated Strategic Foresight Systems
In our own research we find also that low implementation can also be the result from having chosen a Follower (or Defender) strategic orientation. Followers tend to have lower strategic foresight capabilities than Leaders (Prospectors), however they also have on average lower innovation and financial performance. Other firms simply report that they have too little knowledge about how to implement strategic foresight and indeed there are still too few courses, consultants, and textbooks that would offer guidance.
The result is that only few firms have been able to implement competitively-relevant strategic foresight capabilities. But as our own research on value creation has shown, firms that do implement integrated strategic foresight capabilities, can also expect positive impacts along multiple dimensions.
For more information on the study of Dr. König and colleagues you can follow this reference: König, Michael, Sedlatschek, Elisabeth, Wallner, Natalie. 2014. Strategic Foresight. Oder: Hic sunt dracones!. CFO aktuell – Zeitschrift für Finance & Controlling (4): 139-141.