To examine how the art-of-the-possible, future-back approach to strategic formulation works, let’s break it down into three sequential steps.
1. Anticipate the future through analysis and purpose
Engaging in an empirical, clear-eyed analysis of a broad range of data and indicators, a future-back approach aims to unpack key megatrends, assess how they might shift market conditions and align these insights with the organization’s purpose. Together we look at the definition and direction of the market, examining where it is going, what might create value in the future and how the organization can position itself to capitalize on potential disruptions. These activities culminate in a new working definition of the ecosystem of the future and where the organization might fit within this new context.
A future-oriented focus goes beyond traditional desktop research, customer interviews and benchmarking. It delves into emerging consumer and technology trends, evolving competitor shifts, legislative and regulatory changes and more to identify key drivers that can change the future and, along with it, the organization’s prospects for relevance in the future. Many of these may be minute or latent indicators; nonetheless they can reveal important clues to a nascent transformation. And, rather than engaging in unstructured or open-ended brainstorming sessions, we uncover these indicators through an informed and directed process of practical ideation, anchored by data and trends into which experienced analysts have credible line-of-sight.
A clear sense of purpose is an essential component of future-planning. During this process of anticipating distant-future scenarios and their consequences, we challenge the organization to define and articulate its purpose for competing today and in the future. When stakeholders across the value chain ― not just employees and customers, but also investors, suppliers and other participants ― embrace “why” change is needed, it becomes easier to align priorities, manage effectively and motivate all parties towards that vision.
2. Respond to the board’s demands for long-term focus
EY’s Center for Board Matters research study reveals that duality of strategy is the most pressing issue for boards. They expect management teams to deliver short term results and have a strategy for success in the long-term. Duality is a broad topic and boards are asking executive teams questions such as: do we focus on our core business or expand beyond the core; do we focus on our current geographies or expand in new markets; do we look for new products or line extensions? Duality success means helping management teams consider multiple options and make the trade-offs transparent. As part of this duality focus, boards are demanding that their management teams articulate their purpose, which they see as a key component of their long-term strategy, and ensure they have the right long-term approaches and measures in place for delivering it.
While long-term value drivers like employee engagement and customer trust are less tangible than shorter-term drivers commonly valued by the analyst community, our research shows that they are actually the strongest drivers of financial success. Long-term value drivers help the organization avoid blind spots in perspective and empowers the organization with a credible voice in a fast-changing market.
With urging from the Board, organizations will continue to be nudged to take a longer-term view and that further necessitates the need for a duality of growth approach to strategy formulation.
3. Chart where and how to play
A dual lens connects insights into the future to the design of the organization’s strategy. With a clearer picture of what the future could hold and the organization’s purpose for succeeding in it, leaders are better equipped to chart their course from present to future with greater confidence and clarity.
In our experience, a dual lens ― one looking from the outside in, and the other from inside out ― is invaluable to understanding the markets, consumers and ecosystem partners to be impacted on the organization’s newly charted journey.
In today’s experience-driven world, human-centered design has become central to all aspects of creating and executing a strategy. When an organization understands the experiences and expectations of the people at the core of its business ― its customers, partners and employees ― it is better able to create and execute efforts to address their needs and drive growth.
Seeking to understand the value drivers that are at play in both the near- and longer-term future, the outside-in approach examines the experiences, interactions, dependencies, unmet needs and pain points of the customer, partner and employee. Along the way, this insight can reveal new opportunities, as well as the potential impact of strategic actions on these groups. Ultimately, these learnings can help distinguish where and how to play by uncovering core, adjacent and disruptive opportunities for growth.
At the same time, leaders can activate an inside-out view, assessing their organization’s processes, value streams, systems and operational requirements to deliver the desired experiences throughout the entire end-to-end journey.
Bringing together the dual lens of outside-in and inside-out, we help clients break down strategic concepts into new business capabilities, technological breakthroughs and cultural shifts, effectively bridging customer-driven growth strategies with the operational requirements necessary to fulfill them. This becomes a strategic roadmap of initiatives and investments prioritized to create impact in the market for both immediate and long-term returns.