Published on July 23, 2005

Predicting the future in more detail

Last week we discussed the importance of predicting the future before attempting to develop your company’s strategy. This week we will examine this issue in more detail. To review, developing your company’s strategy means deciding what products or services you will sell, to which group of customers and end users, and where (markets, sectors, industries). You will also need (see last week’s article) to decide the time frame for your strategy: is it three years, five years, 10 or 20 years? Each industry and company has a unique time horizon.

Peter Drucker, a management consultant, said it this way: “The nature of the business and the nature of the decision determines the time span of planning. In other words, when do you need the results of your thinking to occur?”

Let’s say you have decided on five years as your goal. Before you can think about what type of company you want to have in 2010, you must first think about what 2010 will look like. What you have decided about 2010 – how you have predicted the future – will determine the specifics of the strategy you will develop.

Here are some of the factors to consider when deciding on the time frame:

lRate of change of consumer preferences.

lDynamics of your industry, such as growth, shifts and returns.

lLead time for developing new products/services.

lFinancing and capital requirements.

lPace of social, political, economic change.

lLife cycles of products/services and markets.

lHow fast technology changes.

Next, you need to consider the following environments:

- Macro: what will the world look like – the future business environment and external threats and opportunities.

- Competitive: who are your current and future competitors, how are they evolving, how can they beat you? What suppliers might become competitors, what form of competition might arise that does not exist today?

- Industry: how is the industry changing, are barriers to entry getting stronger or weaker, what about the relative power of buyers versus suppliers?

- Internal: what are your own company’s strengths and weaknesses? What characteristics do you have that might become strengths or weaknesses if acted upon? What opportunities do you have? What threats?

When Strategic Thinking Group works with a client, we spend many hours going over this section, and often end up with a hundred points or more reflecting the company’s analysis of the future. These points are then used to help determine the positioning of the company going forward.

Predicting the future is not an easy thing to do.

This is why most companies fail to do this step when developing their long-term plans. “How can I predict the future?” I am often asked. “I’m not a monk!” My company has spent years developing a system enabling our clients to do just that.

Following our step by step method allows any company to paint a reasonably accurate picture of the future. Then the only problem is to determine the type of company you want to create for that future.

It is tough, but it is fun – and important – to try.

Eric Rosenkranz

Eric Rosenkranz is CEO of Strategic Thinking Group (www.strategicthinker.com) assisting companies to develop, execute and sustain their strategic direction. Contact Eric at er@strategicthinker.com er@strategicthinker.com

Post your comment to this story here