The timeline will make people think that the future is a foregone conclusion.
Editor’s note: This article is from WeChat public account “Harvard Business Review” ( ID: hbrchinese), the original title is “Strategy 2030” “2045 Plan”… The year ending in 0 or 5, is there any special meaning? “, Amy Webb, translated by Ou Ming.
Recently, I have strategically planned for a large industrial manufacturer. Due to the uncertainties in autonomous vehicles, 5G technology, robotics, global trade and oil markets, company executives need to develop a set of goals and strategies to guide the company’s growth from now to the future. However, our work has not really begun, and executives have already named this plan, called “Strategy 2030.”
What makes me curious is why they chose the year 2030 as the benchmark for the plan? After all, the forces that influence the company are on different timelines: the change in global trade is an immediate problem, but in the field of robotics, sometimes gradual progress, setbacks or huge breakthroughs occur every few years. Executives have chosen 2030, is it because the company will do something special after 11 years?
The reason was quickly revealed. It turns out that 2030 is an integer and they were randomly selected. They chose this year because this number gives them a sense of control over future uncertainty. Moreover, this number also makes communication more convenient. As long as the “strategy 2030” is mentioned, employees, customers and competitors will understand it at once, and use this name to describe the company’s vision for the future, consistent with other relevant information conveyed by the company. In addition, companies often use the year ending in 0 or 5 on the timeline as a demarcation point when making long-term plans. The reason is that for the human brain, the multiple of 5 is easy to calculate, but the multiple of 4 or 6 is a bit more troublesome.
To a certain extent, a neat timeline will give you peace of mind, because it makes people think that the future is a foregone conclusion, chaos can be controlled, and success can be planned and guaranteed. However, the real world in which we live is much more chaotic. Some things are completely beyond your controlFor example, regulatory actions, natural disasters; and some factors are subject to the decision-making process at all levels of the enterprise, such as labor development, operating models, new product concepts. The combination of these variables will change the future situation.
Many times, companies will ask the chief strategy officer or director to host a “vision” meeting. This kind of meeting can help the team brainstorm and find new ideas. In addition, most companies develop a one-, three-, or five-year strategic plan to achieve short-term operational goals. However, neither a vision meeting nor a short-term strategic plan can replace the critical thinking of the future. To deal with deep uncertainty, you have to ask deep questions, and the answers to these questions are not necessarily related to a particular date in the future. Where do you want to exert influence? What needs to be done to be successful? How will the company respond to the challenges ahead? This type of deep basic question is best answered by long-term planning.
Why are we not willing to make long-term plans?
As a quantitative futurist, using data-driven models to study the future is my job. I have found that leadership teams often use inflexible short-term solutions to cope with long-term risks, thus falling into a vicious circle and leading to the formation of entropy. Once dependent on the traditional timeline, the constant changes in external forces will allow the team to take tactical responses on a recurring basis. Such tactical responses require significant adjustments and significant efforts within the team; over time, they exhaust the resources of the enterprise, making it easier for companies to be subverted.
For example: In order to predict the future of journalism, I held meetings with several newspaper executives in the United States in 2001. They also selected a target year: 2005. At the time, the technology sector was undergoing extremely rapid changes, leaving the journalism industry clearly at risk of being subverted. I have long noticed the cognitive bias that executives are caught in because the year they chose ended in 5 years. What I didn’t expect was that executives were reluctant to make plans for four years later, because for them, four years later is a distant future. This makes me worry, because under such circumstances, our strategy for dealing with future risks and finding new opportunities may end up being just tactics. If you do not look to the longer-term future, the implementation of tactical actions will only weaken the journalism’s ability to control the overall changes in the media ecosystem.
To illustrate this, I told executives that I used to use the new Japanese i-Mode phone when I was living in Tokyo. This is a prototype smartphone that not only connects to the Internet, but also has a shopping feature; more importantly, it has a built-in camera. I asked executives: What happens if the price of mobile device components falls? The mobile content, digital advertising and revenue sharing business models are sure to suddenly become commonplace, isn’t it? againSoon, anyone can post photos and videos online, and a complete mobile gaming ecosystem is about to be born.
The popularity of smartphones is after the target year of 2005. Although smartphones still have a risk to the existence of journalism for some time, journalism still has time to develop and test a long-term business model. The smartphone market will not wait until many years later, and publishers have long been accustomed to developing and implementing strategies every quarter, so planning for this market is worthless to them.
Since that meeting, the circulation of newspapers has been steadily declining, but American publishers have not made long-term plans, so they have not designed a completely different income model for the digital age. As a result, advertising revenue across the industry fell from $65 billion in 2000 to less than $19 billion in 2016. In the United States, 1,800 newspapers closed down between 2004 and 2018. To this end, publishers have developed a series of short-term tactical responses (such as redesigning websites and developing applications) without having a clear vision for industry changes. Similar situations have occurred in other areas, including professional services, cable communication operators, savings and loan banks, and manufacturing.
Instead of using the timeline, use a time cone
The way futurists think about time is very different, so the company’s strategy officer can learn from them in this regard. As long as there are any uncertainties in the future (such as risks, opportunities, growth), futurists tend to think about short-term and long-term issues at the same time. In order to do this, the framework I use does not record the passage of time in units of quarters or years; it measures the certainty of the various situations and also records the specific actions. Therefore, my timeline is not a line, but a cone.
When I plan strategically for the company, I design a cone that contains four different areas, namely tactics, strategy, vision, and system-level changes.
(It’s better to use a time cone instead of randomly setting goals on a quarter or year line. First, if there is data or evidence that an event is most likely to happen, you Mark it down and scale it out. You have to make strategic planning in every area of the cone; each area containsThe previous area, so every plan will extend to the company’s major system-level changes. )
First, if there is data or evidence that an event is most likely to happen, I will mark the event at the top of the cone. In general, these events occur for about 12-24 months, but the exact time varies by project, company, and industry. Whether within or outside the company, we can observe the formation of trends and predict which events are likely to happen. Therefore, we can make tactical planning, and the corresponding actions can include: redesigning the product and identifying a new target customer base.
Tactical decisions must be consistent with the company’s strategy. At this point in the cone, our certainty of the results is lower because we are studying the next 24 months to 5 years. This is where the strategy officers and their teams are most familiar: they have to develop a traditional strategy and the direction in which the company will go in the future. Actions in this area include: prioritizing, allocating resources, and making the required personnel changes.
Many companies are caught in a cycle of developing strategies and coming up with tactics. While such a process feels like a cautious plan for the future, in reality, it will only allow companies to catch up with competitors, newcomers and external subversives.
So, in addition to constantly adjusting your company’s vision for the future, you are willing to accept a greater degree of uncertainty. A company’s vision cannot contain every detail, because there are still many unknowns. Leaders can express a strong vision for the future 10-15 years later, but at the same time, they will encounter new technological trends, global events, social changes and economic changes, so they must be in the strategic and tactical areas of the time cone. Repeated planning. In the vision area, we will plan the future action plan based on the research direction of the executive leadership team, the investment target and the development of the labor force needed in the future.
However, the company’s vision must also be consistent with the last region (system-level change), which means that companies must prepare for disruptive forces that may emerge in the more distant future. In the face of new technologies, market forces, regulatory systems and other challenges, the entire industry must respond; if executive leaders do not have a clear understanding of this, then their future can only be dominated by others. The back end of the time cone is very wide, because it is impossible to calculate the probability of such an event happening, so all you need to do is describe the direction in which you want the business and the industry to change.
On a traditional timeline, the target date and the point in time to follow are fixed, but the time cone is different: it moves continuously. As you gain new data and evidence, and progress in action, the front and tactical areas of the time cone move to the day of the day. Ideally, your business will become more flexible so that it can be continuously and repeatedly planned to respond to external developments.
Strategic planning for a golf cart manufacturer
For example: Suppose a golf cart manufacturer wants to use this approach to plan for the future transportation industry. We will consider some of the macro forces associated with golf carts, such as the growing elderly population and climate change. We must also consider emerging technology trends that will impact future business, such as automating the last mile of logistics, computer vision, cloud artificial intelligence, and connecting these trends to the business. We will also investigate research conducted by startups and other companies: large companies such as Amazon and Google, and startups such as Nuro, are developing small vehicles to provide short-distance package movement. Under these factors, golf carts can be converted into climate-controlled vehicles in the future, allowing them to carry passengers and deliver drugs, groceries, office supplies and pets without the need for a human driver. We will give it a name, called “mini G.” The manufacturer of golf carts already has the core competence, supply chain and expertise to form a fleet, which is a strategic advantage over large technology companies and startups. As a result, traditional companies have the opportunity to take the lead in shaping the future.
Once the concept of a distant future is in place, the leader can plan at all times in all areas of the time cone. The authorities must develop new regulations for driving speed and driving routes. Cities can work with urban planners and architects to design new entrances and routes for the “mini G”. Pharmacies such as CVS and Walgreens can take the lead in purchasing “mini G” to provide climate-controlled prescription drug home delivery services; as technology advances, “mini G” may also be used to collect blood and other diagnostic samples. At the back end of the time cone, the leader of the golf cart manufacturer determines how the ecosystem is formed and sets the vision for the future of the business.
And at the front end of the time cone, executives will incorporate “mini G” into their strategy. Actions in this area include setting and realigning budgets, restructuring business units, recruiting new employees, finding partners, and so on; such actions require greater effort and longer time. They will become more flexible in order to make new decisions based on the development of the situation in the next three to five years. Although the future described above is far away from us, under these considerations, the company can now begin tactical research, including: macro forces related to golf carts, emerging technology trends, and ongoing Develop all companies, startups and R&D labs that make up the various components of the ecosystem (such as last-minute logistics, object recognition). In the coming year, the golf cart manufacturer will assemble a group of employees and experts to form a cross-functional team; the company will also conduct internal audits of its capabilities, start learning courses and workshops, and assess current and potential Supplier, and continue to pay attentionNew developments beyond. By taking tactical actions, the knowledge acquired by employees and teams will be helpful in the development of strategies that will continue to shape the company’s vision and lead the company to the future of the golf cart industry.
In the face of profound uncertainty, dozens of companies around the world have begun to use the time horizon cone. Their leaders take an exponential mindset and continue to take incremental action, giving them the ability to shape the company’s future. Although this is a violation of instinct, you have to give yourself and the team the opportunity to consider short-term and long-term development at the same time. Don’t choose a year starting with 0 or 5 to start your strategic planning process. You will definitely find that your business will become more resilient even in the face of continued disruptive forces.
Amy Webb|文
Amy Weber is a quantitative futurist and a professor of strategy at New York University’s Stern School of Business. She is the author of The Signals Are Talking: Why Today’s Fringe Is Tomorrow’s Mainstream.