Since (non-incremental) innovation is playing out in a multi-year horizon, companies need to anticipate the long-term future in order to ensure innovation effectiveness. However, this is not easy.
This article points out why this is so, offers a proven practical approach to mitigate some of the challenges involved and points to a global flagship conference which brings together some of the greatest scientists and most accomplished entrepreneurs.
Wayne Gretzky, arguably the best ice hockey player ever, once replied to the question why he became so successful, ‘I skate to where the puck is going to be, not where it has been.’
This could also be translated to management of (non-incremental) innovation. Studies and cases on successful radical and/or disruptive innovations in Playing Fields 2 and 3 show that a time-to-impact from 3 years (rather 5 years) to 10 years needs to be established. In other words, to ensure success and effectiveness of (non-incremental) innovation companies need to skate where their business will be in 5 to 10 years – not where it is today or where it has been in the past.
The inherent problems with the long-time horizon
Let’s briefly travel back 10 years in time. The iPhone was just released but the widespread use of mobile Internet and the ubiquity of Touch user interfaces was not there. Facebook had just surpassed mySpace with 100 million users. Amazon’s revenues were 5% of WalMart’s and its market cap was USD 33 Billions (compared to today’s USD 850 Billions). The first ‘Cloud’ services were signing up their first users and ‘Digital’ was associated with ‘IT’ and ‘Internet’ – not with Blockchain, Machine Learning or ‘Industry 4.0’. Music listeners used CDs since streaming was not invented. Software was shipped in boxes (due to bandwidth limitations) and not downloaded via App Stores.
These few examples show that anticipating 10 years is hard to do. The number of PESTEL (Political, Economic, Social / Societal, Technological, Environmental and Legal / Regulatory) trends is increasing by the year. And if one takes the effort to analyze the individual trends – beyond the big bold ‘megatrends’ such as ‘urbanization’, ‘climate change’ or ‘demographic shift’ – one sees that their volatility is also increasing and consequently – as BCG has shown with quantitative data – the business volatility is also increasing by the year.
Adding fuel to this volatility is that a number of fundamental new technologies have reached the ‘plateau of productivity’. Some of these technologies are ‘Digital’ such as Artificial Intelligence or interconnected smart Supply Chains, often referred to as ‘Industry 4.0’. Some of these technologies are outside ‘Digital’ such as Genomics, in particular CRISPR (Cas9). – But there is hardly one expert who is able to tell the future trajectories of these technologies.
The managerial problems with the long-time horizon
It is not only the complexity of the situation that makes future insight so difficult. It is also because managerial approaches in many companies are not adequate.
Of course, every company says that it has a strategy. Unfortunately, most of these strategies are more some sort of forward accounting and a somehow ‘inside-out’ linear extrapolation of the current state. Seldom these strategies are a ‘back from the future’ approach which will then help to decide where to play and how to win. Typically, these strategies cover only a 3-years horizon which is too short for radical and disruptive innovation.
To compensate for the shortcomings of their strategy processes, a number of companies have installed ‘Strategic Foresight’ departments. These departments typically invest into identifying / projecting outside-of-current-business trends and make them understandable for decision makers. Since decision makers are usually not skilled in outside-of-current-business-trends, communication tools such as ‘trend radars’ are used. The problem with this approach is typically that such a condensed format does not provide enough ‘high touch’ for Senior Managers to buy in.
Neither typical strategy processes nor a corporate foresight function makes life easier for the non-incremental innovator. Fundamental questions of an innovation strategy (e.g. where to play, how to win, where to be Pioneer and where to be Fast Follower, where to innovate openly and where not) are in many cases not answered and need to be tackled by the innovator.
Pictures Of The Future
One practical approach to provide substance to (innovation) strategy discussions is based on the premise that if it is so hard to predict the future in which radical and disruptive innovation should play out it is more productive to have a joint understanding about the potential trajectories of business and what this means to the company within the Senior Management team.
We call this process ‘Pictures of the Future’. Its goal is not to deliver a 360° view on how the world and business will look in 5 to 10 years. Rather its goal is to conduct an outside-in process that delivers
- a deep-dive into one key business question and
- a structured discussion on what this means for the company.
Typically, questions answered in this process are ‘How will future value chains in our industry look like?’ or ‘What would be the role and nature of service category xy in the future?’
We call this process ‘Pictures Of The Future’ since the discussion about the future is summarized in one rich and detailed picture (and not in a document of several hundred pages). The process of creating this one picture (and discussions like ‘What will be in the foreground, what will be in the background?’ or ‘What is the relationship between x and y?’) helps to sharpen the focus and build up the common understanding in the Senior Management team.
The process itself builds on diversity. It includes a carefully selected group of external (in many cases cross-industry) experts and takes an outside-in view. It is well-structured with defined points in which Senior Management will be involved:
- Which role should the company play in this ‘Picture Of The Future’?
- What are the gaps between the intended role and the current trajectory?
- Which parts of the gap will be closed via corporate or Business Unit activities (e.g. M&A), which parts of the gaps will be closed with strategic partners (e.g. Joint Ventures) and which parts of the gap need to be closed via radical or disruptive innovation?
Curious 2018: Global flagship conference on Future Insight
Merck, a leading global science and technology company in Healthcare, Life Science and Performance Materials, and one of our clients made ‘Future Insight’ the headline of a global flagship conference called Curious 2018 . The conference will have some 1,000 participants and brings together some of the greatest scientists – including 5 Nobel Prize laureates – and some of the most accomplished entrepreneurs.
The conference aims at jointly looking into the future, and imagining solutions to solve global challenges in five areas:
- Healthy Lives – New breakthrough therapies and diagnostics
- Materials & Solutions – Chemistry and beyond
- Bright Future – New ways of working and collaborating
- Life Reimagined – Synthetic biology and beyond
- Vibrant Digital – The power of ‘in silico’
One highlight of the conference is the awarding of the Future Insight Prize 2018. This prize will be awarded for discovering new ground-breaking science or developing enabling technologies that help to create ‘dream products’ of global importance for humankind. The award will also be streamed live at http://bit.ly/2KZVuB1