Killing the Official Future
Originally published in Research-Technology Management
A company’s “official future” is a key element of its culture, emerging from shared assumptions people in the organization hold about the future and their understanding of how that organization has managed against those assumptions in the past. An assessment of your organization’s official future, and a program to identify and fill in its gaps, is the first step in applying foresight to your innovation portfolio and strategy development. Acknowledging the official future, and its role in an organization’s culture, can be a critical step in driving culture change to pull an organization into the future.
Despite our perceived inability to use the future to guide choices, in reality we do it hundreds of times a day. We all have a mental model of the future, built up over time based on experience and socialized points of view, that we reference subconsciously. This mental model helps us quickly assess risks and consequences and take action—when, for instance, weather seems likely to threaten an important delivery to a customer, a data problem is pushing back the research timeline, or a competitor is cutting prices or romancing an important distributor. For all those cases, our mental model of the future means that identifying the best course to move ahead is almost a reflex, an instinctual and well-known set of actions like the muscle memory of a world class tennis player.
That mental model is incredibly good at helping us make quick decisions for short term activities, but it remains relatively static. That means it may fail to assimilate dramatic shifts in the forces shaping the future, either quickly or over time. The results can be disastrous. In his remarkable book Deep Survival (2004), Laurence Gonzales studies a number of human disasters, from shipwrecks to mountain climbing accidents, alongside cutting-edge fMRI studies of what happens in the brain during stressful conditions. His conclusion is simple: those who perish continue to make decisions using the same frameworks as before. Survivors recognize that conditions have changed and immediately discard the assumptions and goals they had relied on. They abandon their official future.
It turns out it is the same for organizations. In 1983, Royal Dutch Shell undertook a study to discover what makes some companies last while others fail. As Arie de Geus recounts in The Living Company (1997), of the four common conditions researchers identified in long lasting companies, the first was “anticipating the need for change at least once during their lives…frequently, someone within the enterprise would identify the crisis ahead of time, but not as a crisis; it was a new opportunity, an alternative avenue for company growth.” (p. 23). Somehow, some companies can sense deep change in their business environment, recognize the need to alter their approach to accommodate (or exploit) it, and execute that change in a way that doesn’t just avoid risk, but increases success.
So why is it that some people or companies can do this and others cannot? It comes back to the official future. The brain works hard to create this mental model and it is reluctant to abandon it. Instead, when confronted with disconfirming evidence, it finds ways to fit the new information to the old model, resisting the hard, scary work of a radical adjustment. Powerful norming forces, within organizations and even industries, can do the same.
An example is playing out right now, as rumors swirl that Apple is developing an electric car. The former CEO of GM says Apple doesn’t know what it’s getting into in automobile manufacturing— the complexity of taking raw steel and turning it into a car means economy of scale and low margins, neither of which fit Apple’s business model. That view is based on an official future in which people drive their own cars, with all the values that version of the future endorses, including performance and drivability.
But it’s clear that will not be the value for cars in the future. Millennials are buying fewer cars and looking for different attributes in their transportation. Car sales for this generation are down, and Zipcar memberships are up. Driving is down, and Uber use is up. These consumers value access, not ownership, and connectivity, not performance. This generation is also more environmentally conscious than those that came before them. What does this mean for the future of the car? We can make some projections:
Demand will rise for electric vehicles that are more environmentally friendly and do not have the internal complexity of internal combustion engines.
Self-driving cars will emerge that allow occupants to tweet, text, and Instagram while in transit. They will obey all traffic laws, not require high speed cornering or braking, and be safer than cars driven by people—as a result, they will require far less complexity in construction.
Municipalities will have a vested interest in encouraging self-driving cars, since a coordinated, connected transportation environment can squeeze significantly more cars onto the same roads while reducing traffic and increasing productivity, so they will create regulatory mechanisms to encourage electric self-driving cars.
Sounds like a dramatic shift is under way, and traditional car manufacturers are either not recognizing it or discounting it. An outsider—one with a history of recognizing these shifts and making high margins in traditionally low margin businesses— is looking at this change and seeing a way to enter the market that plays to its competencies. Who are you going to bet on?
So that’s the theory—people in organizations develop a mental model of the future that helps them make operational decisions but limits their ability to see crucial shifts in the larger strategic environment. Recognizing these shifts as opportunities hinges on the ability of organizations to constantly survey their external environment with fresh eyes and escape from the “official future” to make longer term strategic and innovation decisions.
In practice, the first step is to describe the official future operant among decision makers and front-line managers. Short interviews can record the perceived trends; challenges, opportunities, assets, and capabilities of the organization; strategies that have worked in the past; and participants’ ideas for the future. Typically, analysis of these interviews will yield 6–10 trends that are recognized by at least 50 percent of the participants and 20–30 more that are mentioned more than once. Feeding a report of all the larger set of trends back to the organization reflects to members the basic assumptions about the future that are driving the organization’s decision making—essentially making visible the official future under which the group is operating.
Once a sketch of the official future has been developed, the organization can look for gaps in its knowledge of the present and fringe trends that may produce shifts in the business environment. De Geus found that sensitivity to the changing environment was critical for long lasting organizations. Gathering the information to feed that sensitivity has always been challenging. Historically, the companies in de Geus’s study “relied on packets carried over vast distances by portage and ship” (de Geus 1997, p. 6). When Royal Dutch Shell launched its scenario planning process in the 1970s, it built a network of “remarkable people” to get global first-hand views of trends, research, and geographic regions. These days, the Internet can make this information gathering very easy, and it has made the process of finding new information about the future much more efficient.
But primary, in person research remains critical, for three reasons: First, getting people inside the company to travel and experience new things gives them ownership of trends in a way a presentation cannot. Second, the information you find on the Internet is available to competitors as well, meaning it offers no proprietary advantage. Finally, in an age of customer centered innovation, design research can significantly deepen an organization’s understanding of how fringe trends will evolve on the ground, including the constraints to wider adoption and the workarounds to those constraints employed by lead users.
These are the first steps in recognizing and eradicating the official future inside organizations. Once this is accomplished, leaders can recognize the need for change, and the organizational culture will embrace rather than resist the transformations required to meet new challenges.
References
Gonzales, L. 2004. Deep Survival: Who Lives, Who Dies, and Why.
New York, NY. W.W. Norton and Company.
de Geus, A. 1997. The Living Company. Boston, MA: Harvard Business Review Press.