Corporate foresight

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Corporate foresight has been conceptualised by

corporations as a set of practices, a set of capabilities and an ability of a firm. It enables firms to detect discontinuous change early, interpret its consequences for the firm, and inform future courses of action to ensure the long-term survival and success of the company.[1][2]

Motivation

To overcome three major challenges

There are three major challenges that make it difficult for organizations to respond to external change:[1]

  • A high rate of change that can be seen in (1) shortening of product lifecycles, (2) increased technological change, (3) increased speed of innovation, and (4) increased speed of the diffusion of innovations
  • Large organizations' inherent "ignorance" that results from (1) a time frame that is too short for corporate strategic-planning cycles to produce a timely response, (2) corporate sensors that fail to detect changes in the periphery of the organizations, (3) an overflow of information that prevents top management to assess the potential impact, (4) the information does not reach the appropriate management level to decide on responses, and (5) information is systematically filtered by middle management that aims to protect their business unit.
  • Inertia which is a result from: (1) the complexity of internal structures, (2) the complexity of external structures, such as global supply and value chains, (3) a lack of willingness to cannibalize current business fields, and extensive focus on current technologies that lead to cognitive inertia that inhibits organizations to perceive emerging technological breakthroughs.

Need

In addition to the need to overcome the barriers to future orientation a need to build corporate foresight abilities might also come from:

  • a certain nature of the
    corporate strategy
    , for example aiming to be "aggressively growth oriented"
  • a high complexity of the environment
  • a particularly volatile environment
  • a hostile environment

To operationalize the need for "peripheral vision", a concept closely linked to corporate foresight George S. Day and Paul J. H. Schoemaker developed a questionnaire with 24 questions.[7]

Implementation

The five practice dimensions

Based on case study research in 20 multinational companies, René Rohrbeck proposes a "

Maturity Model
for the Future Orientation of a Firm". Its five dimensions are:

  • information usage describes the information which is collected
  • method sophistication describes methods used to interpret the information
  • people & networks describes characteristics of individual employees and networks used by the organization to acquire and disseminate information on change
  • organization describes how information is gathered, interpreted and used in the organization
  • culture describes the extent to which the
    corporate culture
    is supportive to the organizational future orientation

The model is operationalised through 20 elements which have four maturity levels each. These maturity levels are defined and described qualitatively, i.e. by short descriptions that are either true or not true for a given organization.[1]

The three process steps

Organisations need to build foresight through three core process steps, which build on specific practices:[8][9]

Corporate foresight can be expected to be a determinant of the quality of strategic conversation.[14][15] It will also, in line with digitalisation of other organisational processes, be driven by online platforms that allow broadening the scope of the people who can get involved in defining new courses of action.[16]

Innovation management

Through an empirical investigation Rohrbeck identified three roles that corporate foresight can play to enhance the innovation management of a firm:[17]

The study also showed that only a small number of firms have implemented the third role. In the majority of firms the aims of an innovation development project that have been defined are not challenged after the initial decision has been taken. This carries the risk that changing environmental conditions threaten the success of the innovation in development.[17]

Additionally, von der Gracht and Vennemann have developed a portfolio-approach, the so-called ‘Future-Fitness-Portfolio’, which enables companies to qualitatively compare amongst others and identify organizational improvement potential. The authors base their framework on both, corporate foresight and innovation management.[19]

Foresight and external search

External search, understood as all organisational activities that involve the creation and recombination of knowledge from a wide range of external sources outside the boundaries of the firm, has recently been suggested as one of the key research frontiers for corporate foresight.[20] Corporate foresight utilising external search for knowledge entails the usage of novel methods to monitor external development. Among these novel methods, Social Media Analytics for external search for knowledge and open foresight that enable firms to tune in to weak signals and scan the periphery has been shown to hold particular potential.[21]

Benefits

Firms that have applied corporate foresight have received a number of benefits:[22][23]

  • Identify changes ahead of competition
  • Trigger innovation initiatives
  • Challenge innovation projects to make them more successful
  • Overcoming dominant mental models that stand in the way of necessary organisational response
  • Moderate strategic discussions
  • Breaking away from path dependency
  • Support the search, development, and acquisition of
    strategic resources

On a higher level it has been documented that firms will be able to [24]

  • Enhance their perception on the external environment
  • Trigger strategic organisational responses
  • Trigger new innovation initiatives
  • Contribute to organisational learning
  • Shaping the future (by influencing other players to act)

More recently a longitudinal study, that tracked 83 companies over a period of 7 years, has found that firms that have the right maturity level of corporate foresight practices (high future preparedness) can expect an on average 33% higher

profitability and a 200% higher market capitalisation growth, when compared to the average.[8]

Case studies

In recent years corporate foresight has become more professional and widespread.[25][26] Documented examples of organizations applying corporate foresight practices include:

Such organizations typically use corporate foresight to support strategic management, identify new business fields[42][43] and increase their innovation capacity.[17]

See also

References

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  4. ^ Andriopoulos, C., & Lewis, M. W. 2009. Exploitation-Exploration Tensions and Organizational Ambidexterity: Managing Paradoxes of Innovation. Organization Science, 20(4): 696-717.
  5. ^ O'Reilly, C. A., Harreld, J. B., & Tushman, M. L. 2009. Organizational Ambidexterity: IBM and Emerging Business Opportunities. California Management Review, 51: 75-99.
  6. ^ "Strategy Under Uncertainty". Harvard Business Review. 1997-11-01. Retrieved 2018-01-12.
  7. ^ Day, G. S., & Schoemaker, P. J. H. 2005. Scanning the periphery. Harvard Business Review, 83(11): 135-148.
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  31. SSRN 1515343. {{cite journal}}: Cite journal requires |journal= (help
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  35. ^ "CORPORATE FORESIGHT AT CISCO: INTRODUCTION OF THE TECHNOLOGY RADAR". thecasecentre.org. Retrieved 2018-01-13.
  36. ^ Rohrbeck, René; Arnold, Heinrich; Heuer, J (2007-02-12). "Strategic Foresight in Multinational Enterprises - A Case Study on the Deutsche Telekom Laboratories". ISPIM-Asia 2007 Conference.
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  39. ^ "Living in the Futures". Harvard Business Review. 2013-05-01. Retrieved 2018-01-13.
  40. doi:10.1016/j.techfore.2011.08.007
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  41. ^ Braun, Karl; von der Gracht, Heiko (October 2018). "Assessing future readiness: how a private audit contributes to addressing foresight" (PDF). European Court of Auditors, ECA Journal. No. 10, October 2018: 55–58. {{cite journal}}: |volume= has extra text (help)
  42. ^ Rohrbeck, R., S. Mahdjour, S. Knab, T. Frese (2009) Benchmarking Report - Strategic Foresight in Multinational Companies Report of the European Corporate Foresight Group: Berlin, Germany
  43. S2CID 155015492
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Scientific Journals

External links

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