Foresight in Organisations Revisited

A few years ago I took a Masters unit of study about Foresight in Organisations.  In its early iteration the unit covered several topics:

∙ Conceptual theories of strategic planning: Alfred Chandler‘s structure and strategy, Michael Porter‘s 5 Forces model and contributions to industrial economics, Gary Hamel & C.K. Prahalad‘s early work on core competencies and industry whitespaces, and Henry Mintzberg‘s eloquent critique of the strategic planning function.


The operational span of strategic planning including an overview of
business units, corporate level strategy, and multi-national
conglomerates.

∙ Good practices in change management and organisational interventions such as Elliott Jacquesrequisite organisation, Ralph Stacey’s shadow or informal networks in organisations, Richard Hames‘ strategic navigation, and Peter Senge‘s view on learning organisations.

∙ Practitioner reflections and post-implementation case studies on creating a foresight function in organisations from Andy Hines, Sohail Inayatullah, Peter Hayward and Joe Voros.

The most fun part was a lunch with Hines around the launch of the Association of Professional Futurists.

The
student cohort grasped several hypotheses from these topics: (a) the
limits of traditional strategic planning in a complex environment, (b)
the emergence of anticipatory management and strategic foresight as two
new paradigms, and (c) how the foresight function may be embedded in
organisational culture.

In retrospect three broad trends may have influenced the topics and hypotheses:

(1)
Hamel & Prahalad’s view led a new wave of practitioners to frame
the foresight function as a managerial core competence in pragmatic
strategic thinking (thanks to Mike McAllum
for his practitioner insights on Hamel’s influence).  In the contract
phase of a consulting engagement this meant the practitioners often
linked foresight to growth options, visioning and corporate strategy. 
Clients were receptive, partly due to Hamel & Prahalad’s solutions
at the firm and competition levels.  More broadly, exogenous factors
played a major role in creating the macroeconomic climate for client
demand: the 10-year Juglar business cycle, the late 1990s Internet bubble and the M&A wave of European industry consolidation.

(2)
Hamel & Prahalad’s work coincided with the diffusion of new
frameworks for organisational interventions from management theorists
into consulting firms.  Senge’s systems modelling at MIT’s Society for Organisational Learning and Arie de Geus‘s scenarios work at Royal Dutch Shell
were two such frameworks.  If Hamel & Prahalad provided the
strategic rationale, then Senge, de Geus and others suggested the
intervention points: how a forward view and systems awareness could
enhance managerial decisions about corporate strategy.  However this
alignment of the foresight function with strategic thinking did not
explore other potential intervention points: cost management systems,
project hurdle rates for risk-return, and operations management. 
Attention to these would bridge the strategy|operations divide in
organisations that demand quantifiable results.

(3) An
alternative route for contract phase buy-in was to connect the
foresight function with a hot topic that interested the client.  On the
upside, this was a way to raise awareness of dynamics, forces, trends
and challenges beyond the firm or market.  On the downside, the buy-in
now depended on the currency of the hot topic, the differential
diagnosis skills of the practitioner, and the value created by the
solutions.  If the hot topic waned, so might the buy-in for the
foresight function.

With the benefit of five years hindsight I now see how some barriers to Foresight in Organisations might be avoided.

Foresight
in Organisations gives students a grounding philosophy that informs
their consulting approach.  However its philosophy is also a relatively
young discipline with multiple schools of thought and stances, and in
competition from other frameworks, methodologies and stances for client
dollars.  This poses translation challenges between the Foresight
practitioner and their client that arise in the contract, data
collection and implementation phases of a consulting engagement. 
Clarity on how philosophy informs rationale may help the engagement go
smoothly.

The Foresight practitioner also faces cognitive biases
and judgments that can affect their consulting decisions during an
organisational intervention.  The Foresight practitioner’s enthusiasm
for Foresight as a normative stance and silver bullet solution can set them up to fail or give their solutions a shorter half-life.  Specific cognitive biases that the Foresight practitioner may be prone to include positive illusions about their implementation competencies, illusion of control
over others, and unrealistic optimism about the likelihood of
organisational transformation.  The client may also have a shadow
agenda about power and the direction of organisational change which can
blindside any intervention.  Finally, as the Foresight practitioner is
not embedded in the organisation their enthusiasm for change can
trigger defensive routines from others that may delegitimate the
practitioner, block the microprocesses for change, or derail the
organisational intervention.

I learnt the most from the war
stories of other Foresight practitioners: what worked, what didn’t, how
and why interventions failed, and what was done the next time.  You may
mess up as others have messed up before you.  Now I have my own war
stories to add . . .

Duelling Web 2.0 Scenarios: Boom/Bust

Has Tim O’Reilly’s Web 2.0 meme become a high-tech bubble about to burst?

Origins of the Web 2.0 Boom

O’Reilly’s vision of a new Web platform originally fused two developments.

The first development: C, Smalltalk and object oriented programmers devised design patterns in the early 1990s to reuse software code and workaround solutions across projects.  A 1995 catalog catapulted its four authors to software engineering fame.  To capture the rapidly growing number of design patterns programmer Ward Cunningham created the first wiki: the Portland Patterns Repository.

The second development: a re-evaluation of dotcom era business models to encompass new technologies that enhanced the end-user experience including the site interface and information architecture.  Industry buzz around News Corporation’s acquisition of MySpace (18th July 2005), Yahoo!’s purchase of Flickr (21st March 2005) and del.ico.us (9th December 2005), and Google’s stock-for-stock deal for YouTube (9th October 2006) made O’Reilly’s vision the ‘default’ vision for Web pundits and investors.

The media’s buzz cycle soon went into warp speed as Facebook frenzy replaced MySpace mania.  In a move that exemplified the pivotal role of complementors O’Reilly & Associates morphed into the juggernaut O’Reilly Media.  Ajax and Ruby Rails soon replaced Java and C# as the languages for new programmers to learn.  For activists in community-based media, angel investors investing in scalable programming prototypes and international conglomerates seeking to control their industry white-spaces Web 2.0 provided an all-encompassing answer to venture capitalists on how they would change the world.

Two Scenarios: Web 2.0 Boom & Bust

For industry pundits Google’s decision in October 2008 not to acquire Digg may signal the Web 2.0 boom has become a bubble.  If true Google’s decision could be the mirror of News Corporation and Yahoo!’s acquisitions in 2005.  Slate‘s Chris Anderson points to several factors: no tech IPOs in the second quarter of 2008, the cyclical nature of the digital consumer market, the exit of Yahoo! as a potential buyer due to internal problems, market noise due to low barriers of entry for startups, and a smaller “window of opportunity in which startups can think of a new neat trick, generate buzz, and cash out.”  YouTube’s co-founder Jawed Karim adamently believes that Silicon Valley is in a bubble.

Twitter is the latest startup in the duelling scenarios of Web 2.0 boom versus bust. New York Times journalist Adam Lashinsky experiences a similar euphoria to Facebook and YouTube when he visits Twitter’s co-founder Jack Dorsey.  Sceptics counter that Facebook and YouTube have not ‘monetised’ their business models into profitable revenues.  Portfolio‘s Sam Gustin raises the ‘monetisation’ problem with Twitter co-founder Biz Stone who believes that service reliability is a priority over the “distraction” of revenue pressures.  In support of Stone’s position Anderson observes that cloud computing and open source software are lowering the operational costs and slowing the burn rates of startups.

Yet monetisation remains a primary concern for Sand Hill Road entrepreneurs and other venture capitalists.  They differ in their decision-making criteria to Web 2.0 pundits and high-tech futurists: for angel investors and first round VC funding the entrepreneurs will demand a solid management team, the execution ability to control an industry whitespace, and viable sources of future revenue growth.  This is the realm of financial ratios and mark-to-market valuation rather than normative beliefs and ideals which probably influenced the acquiring firm’s decisions and valuation models in 2005-06.

Furthermore, if a Web 2.0 bust scenario is in play, the ‘contrarian’ sceptics will look to Charles Mackay, Charles P. Kindleberger, Joseph Stiglitz and other chroniclers of past bubbles, contagion and manias for guidance.  With different frames and time horizons the Web 2.0 pundits, high-tech futurists and venture capitalists will continue to talk past each other, creating still more Twitter microblogging, blog posts and media coverage.

Several preliminary conclusions can be drawn from the Web 2.0 boom/bust debate.  In a powerful case of futures thinking O’Reilly’s original Web 2.0 definition envisioned the conceptual frontier which enabled the social network or user-generated site of your choice to come into being.  The successful Web 2.0 startups in Silicon Valley have a distinctive strategy comparable to their dotcom era counterparts in Los Angeles and New York’s Silicon Alley.  Web 2.0 advocates who justify their stance with MySpace, YouTube and del.icio.us are still vulnerable to hindsight and survivorship biases. There’s a middle ground here to integrate the deep conceptual insights
of high-tech futurists with the quantitative precision of valuation
models.

It’s possible that the high-visibility Web 2.0 acquisitions in 2005-06 were due to a consolidation wave and strategic moves/counter-moves by their acquirers in a larger competitive game.  There are two precedents for this view.  Industry deregulation sparked a mergers and acquisitions boom in Europe’s telecommunications sector in the late 1990s comparable to the mid-1980s leveraged buyout wave in the United States.  Several factors including pension fund managers, day trading culture and the 1999 repeal of the US Glass-Steagall Act combined to accelerate the 1995-2000 dotcom bubble.  Thus, analysts who want to understand the boom/bust dynamics need to combine elements and factors from Web 2.0 pundits, high tech futurists and venture capitalists.

If the Web 2.0 boom has become a bubble then all is not lost.  Future entrepreneurs can take their cue from Newsweek journalist Daniel Gross and his book Pop! Why Bubbles Are Great for the Economy (Collins, New York, 2007): the wreckage from near-future busts may become the foundation of future bubbles.  Web 3.0 debates are already in play and will soon be eclipsed by Ray Kurzweil‘s Transhumanist agenda for Web 23.0.