The Idea in Brief
Will your company survive the changes that may strike your industry in the next five to ten years? The answer depends on whose view of the future is driving your agenda: yours or your competitors’.
Consider these questions:
- Which customers does your company serve today—and which will it serve in the future?
- Who are your competitors today—and who will they be in the future?
- Which capabilities make your firm unique today—and which will make it unique in the future?
If you don’t have detailed answers to the “future” part of these questions, or if your “future” and “today” answers are similar, your company can’t expect to remain a market leader.
Yet most senior managers devote less than 3% of their time to developing a corporate view of the future that’s distinctive, well tested, and deeply shared by colleagues. Why? The task requires enormous commitment and intellectual energy. Difficult questions about the future also challenge the belief that top managers possess a clear, compelling view of the opportunities and risks awaiting their company.
Results? The urgent drives out the truly important. Managers spend too much time catching up to competitors by cutting costs and improving quality and productivity. Such actions are prerequisites for survival, but they don’t provide enduring competitive advantages. To stay ahead of industry change, managers must focus on creating a future in which their company will lead, not follow.
The Idea in Practice
Improving Efficiency and Productivity
Stagnant growth, declining margins, and failing market share often force executives to slash payrolls, R&D budgets, and underperforming businesses—making their companies “lean and mean.” But such moves have more to do with shoring up current businesses than building tomorrow’s industries. They boost share price only temporarily and create a distorted picture of productivity. For example, when an industry halves it workforce but increases output only marginally, the resulting ROI ratio may look impressive—but it disguises the industry’s failure to create new markets.
Creating the Future
Real organizational transformation stems from a shared point of view about your industry’s future. It answers questions such as:
- How do we want our industry to be shaped in five to ten years?
- What capabilities must we start building now if we want to occupy the industry high ground later?
- How should we organize for opportunities that may not fit within current business units’ boundaries?
Creative companies answer these questions by gathering insights from people at all levels in the organization. Example:
Electronic Data Systems’ industry position seemed unassailable in 1992, but some executives foresaw problems—new competitors and fewer new customers among leading IT users. One hundred and fifty managers convened to create EDS’s future. They analyzed threats and opportunities created by the digital revolution. They benchmarked their competencies against competitors’ and considered how to build additional capabilities to develop new opportunities.
With the participation of 2,000+ people, managers formulated a new strategy centered on globalizing (spanning geographical, cultural, and organizational boundaries), informationalizing (helping customers convert data into information, knowledge, and action), and individualizing (mass-customizing services and products).
Though this process consumed nearly 30,000 person hours, EDS now had a broader, more prescient view of its industry and its role—and a view shared by every senior manager.
Look around your company. Look at the high-profile initiatives that have recently been launched, the issues preoccupying senior management, the criteria and benchmarks by which progress is measured, your track record of new-business creation. Look into the faces of your colleagues, and consider their ambitions and fears. Look toward the future, and ponder your company’s ability to shape that future in the years and decades to come.
