Taming the dragon: how to tackle the
challenge of future foresight
Markku Wilenius
Markku Wilenius is based at
the Turku School of
Economics, Finland Futures
Research Centre, Turku,
Finland.
Abstract
Purpose – The purpose of this paper is to highlight the principles that businesses should (and should
not!) follow in their foresight activities and to show how foresight serves the development of knowledge
capital in business companies.
Design/methodology/approach – This paper singles out seven key principles: look to the future;
anticipate future needs; make use of incomplete knowledge; expect the unexpected; think long-term
and short-term; dream productively; and respect knowledge.
Findings – This paper highlights the principles that businesses should (and should not!) follow in their
foresight activities and to show how foresight serves the development of knowledge capital in business
companies.
Originality/value – The paper highlights a recent survey in the USA on how employees understand their
job tasks and their organization’s goals.
Keywords Forecasting, Strategic management
Paper type Research paper
Introduction: why foresight?
A recent survey in the USA on how employees understand their job tasks and their
organization’s goals and on how they support the achievement of those goals produced
some astonishing results. Let’s look at those results when applied to a soccer team of 11
players.
Four out of the team of 11 know which of the two goals on the field is theirs, i.e. know their
company’s objectives. Just two players actually care, i.e. are motivated by their company’s
vision and goals. Likewise, just two players on the team know what position they are
supposed to play and how they are expected to play in that position. In other words, only a
small proportion of employees are clear about what they are expected to do in the company.
Finally, two players in the team of 11 are actually playing against rather than for their team,
i.e. holding back the interests of their unit or organization.
The empirical material for this
article comes from fieldwork
with six Finnish companies in
2005-2006. These companies
are the forest industry giant
UPM-Kymmene, the insurance
company Tapiola, the
advertising agency
SEK&GREY, the rail operator
VR, the design company
Marimekko and the map and
management information
system specialist
AffectoGenimap.
DOI 10.1108/17515630810865671
It is not a very flattering picture of the modern business world. Whereas the ideal company is
like a well-drilled soccer team with a cohesive strategy and a number of talented individuals
working to achieve the same collective goal, this kind of effective teamwork is increasingly
rare in today’s fast-changing, complex business world. It is clear that if a company is not
driven by its vision, strategy and values, it will be unable effectively to manage and use its
potential competence-based resources. It will not be making adequate use of its creative
knowledge capital.
Creative knowledge capital refers to the company’s competitive advantage, which is gained
from the competent management of factors that generate new knowledge assets (Figure 1).
Traditionally these factors are not a matter of conscious management, but they develop and
unfold more or less by chance. The management of creative knowledge capital has to do
VOL. 9 NO. 2 2008, pp. 65-77, Q Emerald Group Publishing Limited, ISSN 1751-5637
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Figure 1 Creative knowledge capital
with the organization’s capacity to change, to anticipate change and to develop and take
advantage of its employees’ innovative skills and competencies. In product development
terms these factors refer to intangible product or service attributes and to the symbolic
environment in which the product is competing for customer attention. Another critical
requirement is the ability of key personnel to read the information coming from the
competitive environment – particularly its weak signals – and the ability of the organization
to transform this information into a capacity for renewal and regeneration.
The management of creative knowledge capital is not so much a matter of direct leadership
and decision-making as of providing the conditions and circumstances for creativity and
innovativeness. The company’s future is influenced by both internal and external factors, by
the organization and the environment. Within that environment, the position of the company
and its products is ultimately determined by market forces. The market serves as a constant
mirror for the company, and it is continuously monitored and analyzed with a view to strategic
readjustment. The detection and processing of these signals in the marketplace requires a
whole new set of tools.
The organization, then, has a crucial part to play in building up the company’s present and
future competitiveness. For purposes of the effective management of creative knowledge
capital it is essential that changes happening in the operating environment are continuously
monitored. If something worked yesterday, that does not mean it will necessarily work
tomorrow. One of the keys to a successful orientation to the future lies in foresight. This
requires of the organization an inherent capacity for renewal, the development and
assessment of which also requires systematic tools.
Forecasting changes has become a core element of the strategic management of
organizations. The management of creative knowledge capital therefore relies crucially on
the ability to anticipate and prepare for changes. The purpose of this paper is to identify
elements of creative knowledge capital in organizations. One of the most central among
these elements, together with the capacity for renewal and innovativeness, is the ability of
foresight.
The business that wants to gain foresight into the future needs to adopt the outlook and
attitude of an explorer. From the fifteenth century through to the eighteenth, European
explorers discovered continents they had set out to search on the strength of little more than
a hunch. Their expeditions were fraught with unimaginable perils and uncertainties, but they
set sail nevertheless. The earliest maps they used dated from antiquity and were
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‘‘ The unexpected is about something new, a situation that was
not there before, a factor whose existence we did not know
about. ’’
fundamentally flawed in that they were based on the Ptolemaic, geocentric worldview. This is
why when they first arrived in the Caribbean, they thought they had reached East India.
Most importantly, however, the early explorers expanded the horizons of the known world
and kick started the phenomenal growth and development of Europe into our present-day
modern society. Cartographers gradually adopted the heliocentric worldview by
Copernicus, Galilei, Kepler and Brahe, accepting that the earth was round rather than flat.
In the wake of the Copernican revolution, new and more accurate maps paved the way for
explorers to penetrate ever deeper into the unknown. Gerardus Mercator, the most important
cartographer of his time, drew the first map that covered the whole world by the late sixteenth
century. The explorers and the maps that were created on the strength of their findings were
crucial to the discovery not only of new physical continents, but also new concepts.
In the future businesses will increasingly need to adopt an explorer’s world view if they are to
recognize and identify their opportunities in a world of which they can only have a sketchy
idea. The basic rule is this: although we cannot know anything about the future, we still need
to act as if we knew something (see Cornish, 2004). In other words we need to prepare for
the future, continue to work and operate in the face of the profound uncertainty that confronts
every explorer. The better we are prepared for the future, the better our prospects of success
in our adventures.
For more and more businesses today the search for novelty and a capacity for renewal are a
condition not only for success, but their very existence. The main axis of competition is no
longer between ‘‘domestic’’ and ‘‘foreign’’ businesses, but between pioneers and early
adopters of new business concepts, on the one hand, and reactive and conformist
organizations, on the other. As business guru Gary Hamel recently has pointed out:
. . . management has allowed companies to cross new performance thresholds. Yet strangely
enough, few companies have a well-honed process for continuous management innovation
(Hamel, 2006).
By contrast, Hamel continues, businesses have long had mechanisms in place for intensive
product innovation; yet it is management innovation that in the long term matters most.
This is why businesses need the outlook and attitude of an explorer. This is why foresight
means something entirely different from the old school tradition of planning. The foresight
paradigm is built around a very practical idea: that idea is to look for options and
opportunities for change before the business is forced to change. There are countless
examples of businesses that have neglected to invest in foresight and that consequently
have been too late in spotting the trends and drivers of change that have transformed the
industry.
Basic rules for future foresight
So what are the factors that businesses must take into account as they set about the task of
foresight? There are seven key principles for quality foresight (Cornish, 2004). Again, the
analogy with exploration is useful.
Look to the future
The first rule is that you have to look ahead and prepare for the future. The opposite to this is
to disregard tomorrow and to focus on today’s needs only. For the explorer, this kind of
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thinking would spell disaster: every successful expedition requires careful preparation. For
businesses, the need for careful preparation is particularly pronounced in the face of major
changes and upheavals. For instance, a common reason for the failure of many mergers is
poor preparation, which cripples company efficiency and presents people with huge but
often unnecessary challenges.
So how do you prepare for the future? Perhaps the most important tool is the company’s
strategic process, which in all but the smallest businesses are usually annual processes. In
these processes it is crucial that rather than just extrapolating future business development
from the past, management takes careful stock of any new factors that may impact the
company’s future development.
As a representative of VR pointed out in commenting on the company’s strategy process:
There’s not enough openness to explore different opportunities, to call into question the existing
strategy. No serious thinking goes on about what could be done and how. It’s all anchored to old
ways; no one seems to believe that real changes are happening out there.
Another representative of the same company observed:
The time horizon in our company is far too short, and we have no people working full time on
sniffing out the future. Planning relies too heavily on statistical data and we really lack a strong
vision of the future. And not enough effort goes into monitoring international trends in the industry.
The company’s strategic processes should provide management with the tools they need to
prepare for different market scenarios. These processes are not just about setting targets for
increased sales, profit margins and market shares. More importantly, management needs to
reflect in advance on the options available to the company should the market situation
suddenly change. It is not uncommon that by identifying new threats and risks, the company
also spots new opportunities.
For many companies a key problem in this regard is that they quite simply are not prepared
well enough. As one of our interviewees from Marimekko said:
Our weakness is a lack of planning, we don’t accumulate enough knowledge but rush off headlong.
So although the aim is to find something new, the company still remains ‘‘rooted to its old
ways and patterns so that the organization does not have the capability to change with the
environment.’’
Preparing for the future requires a system and organization; these are these keys to the
consistency that are necessary for a future orientation. Yes, there must be room for
spontaneity, but spontaneity cannot be the only way to prepare for the future. The situation is
not made any easier if the company’s documented strategy is unclear, or if its focus is on
short-term planning. Effective foresight requires that there are enough people in company
management who are sensitive to the changes happening in the operating environment and
who look ahead to the future.
One of the key factors in the company’s preparation for the future lies in communication
within the company about that preparation. Amongst our interviewees we have heard
comments that:
There are in fact quite a few people who are looking into future opportunities, but their individual
observations do not always pass on into the collective consciousness.
‘‘ The foresight paradigm is built around a very practical idea:
that idea is to look for options and opportunities for change
before the business is forced to change. ’’
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It follows that ‘‘there may be talk about the future outlook, but that does not always translate
into real actions’’.
So if the observations made are not subjected to systematic analysis, they will have no real
implications for the company; the learning process remains incomplete. It is hardly
surprising then that many of the experts we interviewed subscribe to the view expressed by
one respondent that ‘‘there’s not enough systematic foresight to look into the future and the
market situation.’’ In this connection reference is often made to the interaction between
different units and activities:
There is very little interaction and exchange of views across organizational boundaries,
information is not disseminated or processed . . .
Inspiring and motivating this kind of activity is key to building up a future orientation in the
company. Its negation is perhaps reflected in a comment by a representative of
UPM-Kymmene:
Our weakness is that we fail to give adequate and fast enough attention to processing the
knowledge that is created within the organization. The people who compile that knowledge are
easily bored when they notice that nothing is actually done with it.
The lack of appreciation for the feeding of new views into the organization’s knowledge
capital leads to stagnation in terms of both ideas and activities. In the words of another
interviewee from the same company:
There’s a tendency to lean too heavily on current products and production methods rather than to
search boldly for new opportunities.
Motivation grows out of the right kind of culture of doing things. A business operation that is
stuck in an old groove is certainly not the ideal preparation for the future. Another
representative of UPM-Kymmene wanted to see a business climate that ‘‘supports the
creation of new business models, at all levels of the organization. What we need is the
courage and audacity to reorganize, so that in relation to customers we make sure that
people and the real experts are closely involved in the development effort, because at the
end of the day everything is driven by people.’’
One of the key considerations in preparing for the future is the way in which foresight and
other operations related to new products and services are organized. Siemens, Nokia, BASF
and L’Oreal are some of the major companies that have now adopted business foresight as a
core instrument of strategic business development. Yet this kind of orientation to the future is
still quite uncommon. At UPM-Kymmene, for instance, foresight is the responsibility of the
business development unit, yet as its name implies this unit is about developing existing
production rather than searching for something that is radically new. Quite obviously, the
prospects of influencing the future of the business under this sort of arrangement are much
more limited than in the situation where foresight operations are in direct contact with
decision-makers at group level.
Preparing for the future also requires some audacity. As a clearly frustrated employee of
advertising agency SEK & GREY pointed out in our study:
There’s been talk about how the operating environment is changing for years now, but very little
has actually been done in response. Somehow you feel that there hasn’t been the courage or
indeed the skills to change ancient traditions. It’s assumed that people will just change without
any controlled supervision and management, and there are no sanctions for repeating old ways.
I’m sure the knowledge and the understanding is there, it’s just that things have a habit of
remaining rhetoric.
Clearly then, the problem is well-recognized, but in the absence of proper management it is
impossible to achieve real changes in the organizational culture. From this it follows that
observation of the changes taking place in the operating environment does not lead to new
innovations in the industry; any response is a reaction to what has already happened,
something the competition has probably known and done much earlier.
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Liisa Välikangas and Gary Hamel offer some interesting insights into what they call the
resilience of organizations (see Hamel and Välikangas, 2003). This may be defined as the
organization’s inherent ability to prepare for the future. They say that every company that
reads and perceives its operating environment, that produces strategic alternatives and that
regroups its resources more quickly than the competition, enjoys a decisive competitive
advantage. In other words, the explorer who is best equipped for the journey ahead, will
prevail and win.
Anticipate future needs
Another fundamental rule for successful foresight is one to which explorers devote enormous
attention: they try to imagine every conceivable situation that may lie ahead. Sir Ranulph
Fiennes, the most important explorer of our time who among other things is the first man to
have reached both the North and South Poles (Transglobe Expedition 1978-1981), explains
in his books how the most crucial part of every expedition is the stage of preparation when
one tries to anticipate all the needs that the expedition will face. In the extreme
circumstances of polar exploration, surprises cannot be avoided – but the more time and
effort that has been invested in preparation, the better the prospects of coping even with
surprises. According to Sir Ranulph, no successful polar expedition has ever been
conducted without a careful analysis of the information available.
The same goes for companies. Companies need to anticipate and predict their customers’
needs as well as their own needs for skills and competencies. However, we argue that this is
not in fact happening in today’s business world. Most companies continue to live and
breathe production. The development of products and services is informed by the
perspective of production rather than by a consideration of how changes in customers’
immediate needs or in society at large should be taken into account.
Production should first and foremost be driven by customer relationships and changes in
consumer habits. Companies need to be more perceptive, they need a sharper
understanding than customers themselves have of how consumer needs are shifting.
They need to understand the customer’s joys and sorrows, indeed the customer’s whole
world, because it is the bigger picture that matters most. It is for this reason that L’Oreal’s
foresight team is called ‘‘Future scanning unit’’: its job is to probe into the minds of people, to
find out how people in different parts of the world see themselves and their future.
But how best to serve one’s customers, present and future? The first step is to focus on the
factors that will have the greatest impact on the consumer’s life in the future and then to
narrow that focus to those factors that impact one’s own industry. For many reasons we
suspect that one of the most important among these trends will be dematerialization,
evidence of which can be seen in production, consumption as well as in organizational
models (Wilenius, 2004). An immediate example that comes to mind is the development of
mobile phones, which used to be the size of bricks and almost weighed as much, but now
they slide easily into a shirt pocket. The same trend is evident in countless other products.
In production, the tendency towards dematerialization is reflected in the breakthrough of
human capital as the most important factor of production. Creative capital is the key to the
internal flexibility of companies and their capacity for renewal. According to some estimates
up to 80 percent of the true value of a business comes from other than traditional,
measurable capital assets[1]. The company’s intangible assets reside, on the one hand, in
people’s skills and capabilities, and on the other hand in the company’s brand value,
reputation and management system. The greatest challenge for the organization of a
business thus relates to how its creativity is integrated with management and how
management is integrated with the company’s innovation processes.
Another reflection of dematerialization is the growing marketplace demand for services,
concepts, experiences, and cultural meanings and symbols. For the business company the
challenge in this case is increasingly about achieving a pioneer status and setting itself
apart. Creativity, innovativeness and the capacity for renewal and regeneration emerge as
increasingly important success factors.
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Thirdly, dematerialization finds expression at the level of business models and concepts.
The global culture of network society highlights the importance of interaction between
different cultures and organizations. Even in the absence of common values, communication
has inherent value and helps to move things forward. In other words the new culture is not
made of contents but of processes. It is a culture of interaction where the participants are
constantly changing through interaction itself. In the new ecosystem, success will come to
those who can find their own ecological place and adapt to the changes taking place in the
operating environment.
Make use of incomplete knowledge
The earliest explorers had to make do with maps that offered very little solid information but
had more pictures of dragons and some such. Nonetheless even the smallest pieces of
information can be immensely valuable at the right time and right place. Certainty is not part
of the paradigm of foresight; it cannot be because at least in theory, we cannot know
anything about the future. The future, by definition, is something that does not yet exist.
The most important attribute of explorers, both past and present, is that they are practically
minded. Just as no explorer can lock himself up an ivory tower of complete knowledge, no
knowledge gained through foresight can ever be 100 per cent certain. It is essential that we
carefully and open-mindedly read the clues and hints that we find about the future. The
search and management of incomplete knowledge is key.
Researchers in the field of future studies often talk about weak signals. What they are
referring to is some sudden new phenomenon, event or development that no one has been
able to predict. Oftentimes it is not the weak signal itself that matters most, but what it tells us
about some entirely different phenomenon. For instance, some ten years ago fishermen in
the Baltic Sea began reporting catches of herring that had no eyes. Research later showed
that this disturbing anomaly was due to oestrogen-mimicking chemicals, which we causing
abnormalities in the spermatozoa of male herring. In other words, the eyeless fish served as
a signal of pollution in the Baltic Sea.
In our case a weak signal might be an idea or trend that impacts the company’s operating
environment. In today’s turbulent environment where product cycles are ever shorter, it is
increasingly important for companies that they can read the signals appearing in their
environment and steer their business accordingly. Whoever spots the signal first will also
gain first mover advantage.
A weak signal must be distinguished from a strong signal. Identifying a strong signal is not
normally a problem, but identifying a weak one is, for the following reasons (Figure 2).
Figure 2 Development of a weak signal
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‘‘ The business that wants to gain foresight into the future
needs to adopt the outlook and attitude of an explorer. ’’
First of all, a weak signal may be new and surprising to the signal recipient. It falls outside the
familiar fold and therefore may often be hard to comprehend. For instance, if you are a very
health conscious person and avoid fat in all its forms, and then suddenly learn that you
should in fact consume large quantities of fat in order to keep your joints and skin protected,
it might at first be hard to swallow this information.
Second, it may be difficult to detect the weak signal amidst all the ‘‘noise’’ and other signals.
When vinyl was replaced by digital CDs in the 1980s, few people at this time would have been
able to predict the arrival of today’s MP3 players, even though the weak signals were there with
the proliferation of digital recording technology. And when Jorma Ollila held his first press
conference as Nokia’s new President in 1992, he announced that in the future the company
would no longer be making car tires, television sets, picture tubes, car speakers or capacitors.
In its previous interim report, the company had announced its weakest financial results ever.
Instead, Ollila projected that global demand for mobile phones would skyrocket.
Some of those who were in the audience that day scoffed at the idea that people would want
to haul around the bulky and heavy early mobile phone; others were persuaded and bought
into Nokia’s shares. The investor who on that day spent $1,000 on Nokia’s shares sold them
for almost a quarter of a million just seven years later.
The third hallmark of a weak signal is that it is often underestimated by the very people who are
in the know. If you want to develop, say, a new revolutionary yogurt, dairy product development
experts are not necessarily the best source of inspiration as to what that yogurt might contain.
You would probably spend your time more wisely by doing a tour of kindergartens or visiting a
soccer match, where you might gain a fresh angle on developing your product.
In the 1980s, the Swiss Nicolas Hayek was regarded among the watch experts in his country
as something of an eccentric as he proposed that Swiss watchmakers could and should take
on the Japanese who had completely cornered the market for cheap watches, while the
Swiss remained focused on the manufacture of valuable timepieces. Hayek himself came
from outside the watch industry, but was well familiar with its problems: Swiss watches were
‘‘doomed’’ to small niche markets.
However Hayek stuck to his guns and eventually managed to persuade a few like-minded
partners from his own country. A company was born that brought out the Swatch watch,
which had an original design that clearly stood apart from the Japanese concept and that
thanks to technological innovations could be sold at a profit for just e40. A success story was
born that completely transformed the outlook of the Swiss watch industry (Taylor, 1993).
There is more than the one lesson (i.e. that sometimes it is necessary to have someone from
outside the industry to come in and wonder, why not?) we can learn from this story, and that is
this: what at first glance appears as nothing else than a huge threat may by virtue of a weak
signal turn into an opportunity. Before Swatch hit the marketplace in 1983, Japanese
manufacturers such as Seiko and Citizens had in previous decades taken over the low-end
market from Swiss watchmakers, and there was real concern that they would eventually
conquer the market for luxury watches as well. Swatch’s counteroffensive provided a
much-needed boost to the Swiss watch industry’s self-esteem and belief in its future prospects.
The question of weak signals ties in closely with out understanding of customer orientation.
The most profound misunderstanding of this business premise is most typically expressed in
the old adage that ‘‘the customer is always right’’. The fact is that the customer is not always
right, but more important than that, it is very rarely that the customer can answer the question
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as to what exactly it is that they want. Customer relations are a crucial asset for every
business, but for foresight purposes business companies cannot resort to customer surveys
and feedback, because this means they are just looking in their rear mirror.
Expect the unexpected
The unexpected is about something new, a situation that was not there before, a factor
whose existence we did not know about. The explorer must have both the intellectual and the
material resources to deal successfully with this kind of situation as well. The achievements
of Ernest Shackleton and his crew on the Endurance are no doubt among the most
legendary in this respect. Shackleton set sail in 1914 to traverse the South Pole. However his
ship became trapped in pack ice in the Weddel Sea, where it slowly crumbled under the
pressure of the ice and eventually sank. Shackleton and his crew took a few of the ship’s
lifeboats and set up camp on a small island. From there, Shackleton and a few of his men set
out on an incredible 1,200 nautical mile journey, navigating by the stars alone, eventually
reaching South Georgia Island. At the island’s whaling station, Shackleton organized a
rescue team and returned to save the rest of his crew. Shackleton was a strong leader of his
group and a visionary who saved all his men from a virtually impossible situation.
For most of us, every day brings surprises of one sort or another. What we need is the mental
and material resources not only to cope with these surprises, but to translate them into
opportunities and make the best of them. Shackleton and his crew were saved not only by their
proven seamanship skills, but also by the crew’s high spirits and their trust in their leader, but
above all by their ability to act consistently in the unexpected situation they found themselves.
More and more companies today find themselves in a situation that is not dissimilar to the
predicament of the Endurance and her crew as the ship was hemmed in by the ice while
sailing on course. The need for a change of direction is recognized more and more often.
However a new course also, and necessarily, implies a change towards the unknown, and
that is why it is so important to contemplate how to confront the unknown. Competition over
the future is a competition over emerging opportunities; it is about finding one’s own place
and role in creating and seizing those opportunities
Think long-term and short-term
Sir Ranulph Fiennes describes in his book how he spent almost ten years with his wife Ginny
preparing for his ‘‘Transglobe expedition’’, during which he became the first man in the world
(together with his colleague) to circumnavigate the world via the North and South Pole. The
expedition lasted three years, and the two men came close to failure and even death on
several occasions. The final episode was perhaps the most dramatic of all: having reached
the North Pole, the two remaining men on the expedition were drifting southward on an ice
float, not knowing whether they would be reached in time by the expedition vessel before
their transport melted under their feet . . .
In the past 20 years the world has changed beyond recognition. There is no Soviet Union any
more, no Berlin Wall and no cold war; many other things have also disappeared that people
once thought were carved in stone. The global market economy, the growth of information
technology, new civic movements, the phenomenal growth of China and the whole Asian
economy – these and a number of other trends and factors have emerged that determine
the future course of development.
Management requires visionary knowledge. For the business company, that vision must be
found in its short term and longer-term goals. In today’s business environment that is fraught
with uncertainties and complexities, the building of such a vision has to be grounded in an
analysis of future alternatives. This brings us to scenario thinking, the roots of which go back
to the development of modern strategic thinking after the second world war.
Scenario thinking is both the skill and the art of looking ahead into the future, as one of the
world’s leading future researchers, Schwartz (1991), points out in his book The Art of Long View.
This is the ability to see beyond tomorrow, to recognize trends and phenomena that impact
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tomorrow’s – but not yet necessarily today’s – operating environment. In this sense scenario
thinking is indeed a matter of ‘‘looking’’ into the future, even though it cannot be predicted.
Management of the future is needed to challenge existing ways of thinking and doing things.
At its best, future-oriented scenario thinking can help to remove our blinkers and give us
access to new resources and sources of innovation. Nokia’s success story is great
illustration of the power of vision. The road to success was paved when under Jorma Ollila
Nokia took the decision in the early 1990s to concentrate on mobile phones and the building
of telephone networks. This was based on Ollila’s realization in the late 1980s that the
changeover to digital standards in mobile phones would open up huge potential for
European manufacturers and that Nokia’s future lay in taking advantage of these markets.
Within the space of just a few years, Nokia was transformed from a department store into a
telecommunications specialist with a mission to become the world’s leading force in creating
a wireless information society. This was made possible by Ollila’s vision, which was strong
and clear enough to persuade the company’s board and its owners.
It is important then to recognize the forces that shape the future. What are the key factors that
will have the biggest impact on what the world will look like in 2020? It is not difficult to single
out some significant driving forces in the world economy today: these include the
emergence of the Pacific region as the world’s most important economic leader, the strong
tendencies of further unification in Europe and at the same time the relative decline of
European influence, population ageing, the continuing advance of social and economic
digitalization, the phenomenal growth of biological knowledge and the deepening and
politicization of environmental problems. How do these trends and factors impact our own
business and our own decision-making?
Dream productively
Albert Einstein famously said that imagination is more important than knowledge. Dreaming
and imagining are not normally associated with doing business, but indeed, as far as
foresight is concerned, nothing is as important as imagination.
So what exactly does it mean to dream productively? It means at least two things: first of all,
rather than just daydreaming, it is an exercise in creating the world and reality – Professor
Karl-Erik Sveiby, one of the founding fathers and pioneers of knowledge management
research, observed in his studies of the aboriginal Nhunggabarra tribe in Australia that these
people created their own world in exactly the same way as the world of western culture was
created later on. The only difference was that they created a purely immaterial world. It
included key principles of the management of tacit knowledge, but it was immensely rich:
this civilization lasted more than 40,000 years before Australia was invaded by white people,
longer than any civilization before or since. In other words, their wealth was purely and
entirely of an intangible nature (Sveiby and Skuthorpe, 2006).
In Finland, it seems that a central problem for many businesses today is that they do not
engage enough in ‘‘productive dreaming’’. Probably the most important among the many
reasons for this is that the organizational culture does not encourage the search for novelty.
An example is provided by one of the partners in our DYNY project, the insurance company
Vahinko-Tapiola. This is what one of their experts said in our discussions about the role of
foresight in the company’s day-to-day operation:
I don’t think our problem is so much that we’re not interested in predicting the future. I think the
main difficulty is that we don’t put enough effort in trying to imagine what kind of future would be
ideal for us and then take steps to make that happen. Foresight, for us, is a matter of monitoring
developments and responding to competition that has already happened . . .
In the long run this has the effect of suppressing vision in the organization, discouraging
people from suggesting and trying out new ways of doing things. The organization will slow
down and begin to adjust its strategy by looking in its rear mirror. In the words of one Tapiola
expert, it will never even seriously ask itself ‘‘what is the business in which we are involved and
how do we measure our success – while the industry is constantly evolving and reshaping
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itself’’. At the same time, the people who take the organization and its operation close to their
heart will have to acknowledge the uncomfortable facts, as this Tapiola expert did:
The changes in our operating environment are continuing to accelerate and therefore we must be
able to respond faster – faster than the competition. This is not doable with our current business
model – there’s not enough time and space for innovation and foresight, and worst of all, no one’s
expecting or demanding it either.
What, concretely, are the things in an organization that tend to suppress innovativeness and
the ability to dream? Four factors are worth highlighting: The first is the lack of adequate job
rotation, people getting bogged down in their positions and job tasks. As one of the experts
at Tapiola acknowledged:
People remain in the same jobs for too long, not just managers but at all levels. This is certainly not
good news for innovativeness . . .
Nothing livens up the management team’s discussions like the arrival of a new face from
outside the company who has the know-how and the audacity to call into question the
business’s existing modi operandi.
The second factor is the tendency for many organizations to turn in on themselves and
religiously to follow the rulebook, and consequently to fail to listen to their customers and
deliver solutions that are geared to meeting their needs. As one of Tapiola’s experts said:
The bureaucracy and old ways are deeply entrenched and suppress innovativeness, and
ultimately persuade innovative people to move elsewhere.
The third killer of creativity and productive dreaming is slowness, failure to move quickly
enough to get new ideas off the ground. Development will be slow and haphazard ‘‘if there’s
no system in place to collect and implement new ideas for product and service
development, if there’s no agreement on who is supposed to collect, decide on priorities or
set things rolling . . . ’’.
The fourth factor is related to an organizational culture that is not used to failures: ‘‘if you
never try things out, you’ll never make mistakes either,’’ as one of our Tapiola experts pointed
out. But this has its price: ‘‘it means you’re always competing on others’ terms – the rules of
the competition are dictated by others, according to their own strengths, and that means
they’re not necessarily the best terms from Tapiola’s point-of-view’’. Company management
should encourage innovativeness and a sense of active responsibility and so make it easier
for people to come forward with development proposals. As it is, ‘‘no such support is
forthcoming from management.’’
As far as the competition is concerned, the company that is devoid of original ideas and that
never comes up with any new product concepts is obviously the ideal rival. There are never
any surprises in store, but everything it does is totally predictable. For the people within that
company, it is a safe haven, a source of livelihood, but the job they are doing is certainly no
source of inspiration.
In the end it may be a reasonably simple matter to revive an organization’s capacity for
dreaming. As in the case of Tapiola, most workable ideas have already been ‘‘invented’’ by the
people within the organization, it is just that they have not been put to use. So what can be done?
One good way is to organize more or less lighthearted in-house innovation competitions.
Another idea is to facilitate small-scale development projects, without requirements that the
whole organization is involved and represented. The third is extensive and well-organized job
rotation within the organization. The fourth is that all people in the company are encouraged to
come up with ideas on how to improve their own job descriptions, which are then collectively
discussed by immediate supervisors. Fifth, the organization may start to reconsider its internal
recruitment by offering its most competent people better career prospects within the company.
The only way that businesses can raise the level of their collective and productive dreaming
is to tackle their challenges with the seriousness it needs so that their employees can feel
they are like explorers, discovering new places and opening up new worlds to the people
with whom they are working.
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Respect knowledge
The last, but by no means least important principle of foresight is to show respect for the
accumulation of knowledge and know-how. The one thing that explorers always and
unfailingly will learn from their predecessors is how not to act in extreme conditions. The
most important collective strategic goal for the Nhunggabarra tribe mentioned earlier was to
ensure the continuity of all life, and the most important task in pursuing in this goal was to
hand down all the tacit knowledge they had accumulated to the next generation. As
intangible knowledge capital accounted for 50-80 percent of Aboriginal production, the way
they operated can largely be compared to today’s knowledge intensive expert organizations
where both the factors of production and its outcomes are primarily intangible (see Sveiby
and Skuthorpe, 2006).
However the knowledge that the Aborigines handed down from generation to generation
was all-relevant to the preservation and continuity of life. Any other information and
knowledge fell by the wayside. Knowledge and by the same token power was highly
decentralized in the community. Every adult member in the community had their own area of
special expertise; one of them knew everything about the life of lizards, the other was a
specialist in hunting kangaroos. In fact there was no formal leader in the community at all; all
the power that existed was power through expertise. Women always married outside their
own tribe to prevent inbreeding, and at the same time relations with neighboring tribes
remained close. So far as is known, there were no intertribal wars.
The modern world could learn a great deal from the Aborigines. The knowledge they retained
was all essential to the community’s well-being; their advanced ‘‘management system’’
ensured that any irrelevant knowledge was not handed down. The same should apply to
business companies: the business company that looks ahead to its future and works to
develop its strategy must critically review and assess the knowledge, skills, vision and
experience that has accumulated and discard everything that is does not need. In today’s
complex and volatile world, knowledge becomes outdated much faster than it did in the
Aborigines’ world. That is why it is so crucial to have the ability to identify the kind of
organizational knowledge that will stand the test of time and that will help the business
succeed and thrive in the future. There are at least two models or principles for the application
of this kind of sustainable knowledge that is essential to business vitality (see Hamel, 2006):
1. The first is putting to good use the historical experience that company employees have
accumulated over the years. This was the de facto reason why from the 1960s Toyota and
other Japanese car manufacturers began to open up a huge advantage over the US
automobile industry. Toyota had learned how to put their front-line workers’ skills and
expertise to the best use in production, whereas in Detroit the workers were workers and
had hardly any input in business development. In Japan, the historical experience
accumulated by and in employees was immediately put to use in the product development
process, which is largely based on the innovations of front-line workers. As a result, for the
past few decades now, the US automobile industry has lagged several steps behind.
2. The second model has more to do with systemic thinking, which was also the basis for the
extraordinarily long-standing Aboriginal civilization: the idea is to develop processes and
methods that provide broad support for the community’s knowledge development. The
future belongs to companies that adequately make use of their knowledge capital.
Conclusions: foresight as a challenge for visionary management
Our aim in this paper has been to highlight the principles that businesses should (and should
not!) follow in their foresight activities and to show how foresight serves the development of
knowledge capital in business companies. We have singled out seven key principles (Figure 3).
First of all, businesses must stop staring in their rear mirror and turn their attention and
energy instead to the future. Second, in the development of their business portfolio
companies must invest more heavily in forecasting future needs. Third, companies must
make use of incomplete knowledge. Fourth, companies must learn to expect the
unexpected. The future is always different from what you have thought it will be; the key is to
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Figure 3 Seven key principles
think about the future in terms of opportunities and alternatives, some of which will
materialize and others not, depending on one’s own actions. Fifth, it is important to integrate
long- and short-term thinking in the company – too many allow the short-term perspective to
dominate. Sixth, the organization must learn to be bold in its thinking and especially consider
how the creative thinking of its employees can be translated into profitable business. And
seventh, it is important to respect the knowledge that is accumulated in people in different
parts of the organization and to develop that knowledge into a strength for the organization.
Foresight, as the word itself implies, is about looking forward. Any business that does not
look forward, but is bound to the past in its practices and structures, will not be able to see
where it is going.
Note
1. For instance, it has been calculated that 40 percent of the net profit of listed Finnish companies is
based on knowledge-driven earnings.
References
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Vol. 84 No. 2, pp. 72-84.
Hamel, G. and Välikangas, L. (2003), ‘‘The quest for resilience’’, Harvard Business Review, Vol. 81 No. 9,
pp. 52-63.
Schwartz, P. (1991), The Art of the Long View, Doubleday, New York, NY.
Sveiby, K.-E. and Skuthorpe, T. (2006), Treading Lightly: The Hidden Wisdom of the World’s Oldest
People, Allen & Unwin, Crows Nest.
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Creative Economy: Cultural Competence as a Future Resource), Edita Publishing, Helsinki.
Corresponding author
Markku Wilenius can be contacted at: [email protected]
To purchase reprints of this article please e-mail: [email protected]
Or visit our web site for further details: www.emeraldinsight.com/reprints
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