What you will get from this step:
Use this step on its own:
You can use the method described here to make any vision of the future actionable
Review your vision and build on that. Firstly, read Future Competitive Positioning, and then choose the action plan you prefer.
Future Competitive Positioning
In some ways, your business is superior to others. Your offering is better because it's cheaper, or more convenient, or easier to use, or of longer lasting quality, or more fashionable, or whatever it is that separates you from the competition. For each of the scenarios, you'll have to determine how that competitive advantage will change. Seldom does superiority survive unchanged. So here is how you can determine your business' future positioning:
- List the features and benefits that will be unique about your product or service in the scenario
- Decide what emotional need will be precisely met by your product or service. The customers of the future, how have their needs developed?
- Identify aspects of your product or service that your competitors won't be able to imitate. Remember, this isn't about patents and copyrights alone; certain capacities, resources, and skills also belong to strategic capabilities
Develop slogans about your unique product or service that are short, clear, and concise. Use the features, needs, and aspects that will single out your business in the scenarios. Be sure they can be easily communicated to and understood by your customers, now and later.
These slogans are the starting point of all other strategic actions, so keep them with the scenario matrix and the plots in one directory for quick reference.
Action plan 1. Strategic options mapping
Your growth strategy is likely to be different for each scenario. That is a good thing, because that means that combining them into one, will make your company much more resilient to change. Think of strategy as a flow chart with several pathways and decision moments mapped on a timeline. All paths are leading to the same goal: the growth target of the business.
In the chart above, the planned adaptations of a major corporation in infrastructure are shown. It has several climate and policy driven scenarios to work with. Even when you're not in the same business, and your timeframe is shorter than 100 years, their flowchart will clarify the concept of strategy mapping for you.
The grey line represents the current strategy of protecting land against rising sea levels. Due to changing weather, targets begin to be missed after a couple of years. But there are four options available (the four scenarios), here called action A to D.
- Actions A and D should be able to achieve the targets for the next 100 years in all (climate) scenarios
- If Action B is chosen after the first four years, a tipping point is reached within
five years; a shift to one of the other three actions will then be needed to achieve the targets (follow the orange lines)
- If Action C is chosen after the first four years, a shift to Action A, B, or D will be needed in the case of Scenario X (follow the solid green lines)
- In all other scenarios, the targets will be achieved for the next 100 years (the dashed green line)
Actions depend on things like available budget, actual sea level, and changing ideas about alternative ways of water management.
Your Turn: Step by Step Strategic Option Mapping
To figure out your pathways, please use the next step-by-step:
- Take your current strategy and bring it into each one of the scenarios. What elements of your strategy need to change to keep reaching same goals? Develop four pathways, as close to your current policy as possible and map them onto the chart
- To determine the action points of the map, you use two indicators:
- Milestones. Break down your overall goals in milestones and plot them on the timeline. When milestones aren't made, you have to reconsider your current pathway.
- Indicators of change. When a business fails its milestone planning, something may be off with the business drivers. Like when you're in retail, the location of your shop may drive sales to a large extent. Over time, sites change: trees and shrubs grow, people move, buildings get annexes, or parking spaces are removed to make way for something else. Those changes will force you to reconsider too. You already know what may change from the scenarios, but you still have to pinpoint indicators of those changes. In other words: how do you know that a scenario is likely to happen? Put that information in the flowchart too.
Now you have mapped your pathways and marked the milestones and change indicators, you can dive deeper. A series of innovations may be needed to capture values in the scenarios, and a system for monitoring change signs need to be in place.
This concludes the Strategic Option Mapping. Find your way back to earlier steps in the menu below, or read on to go to the innovation pipeline.
Get the Strategic Option Mapping template to use in your meeting room, together with the other templates that go with all scenario planning steps (pdf)
Action plan 2. Innovation Pipeline
Let's start with the pipeline's purpose. An innovation pipeline should bring in the extra revenue that sales can't. Wait, I'll explain by unraveling the composition of a sales target.
When you set goals for the coming years, you take into account:
- Sales volume of core products
- repeating customers
- upsell and cross-sell
- new customers
- churn (defecting customers)
- Mergers and acquisitions
And you probably end up with a gap between the target and the revenue of sales and M&A combined. The main reasons are churn, decreasing numbers of repeating customers, who also won't spend as much as the first time, and the dwindling attraction of older products and services. Innovations have to fill that gap and keep your offering fresh.
The Pipeline's Steps
The scenarios are the starting point for ideation, the first step of the innovation funnel. After brainstorming ideas, you'll have to prototype and pilot to make it work. Depending on your industry and product type, an innovation funnel looks different. However, most pipelines consist of Ideation, Development, Business Modeling and Testing
From Scenario to Idea
I've had many successful funnels starting with a simple ideation exercise. The exercise is based on the future competitive advantages you've defined before. Many silicon valley firms use this brainstorming method.
- Prepare a brainstorm room: Cover as much of the walls of the room as possible with writable surfaces like paper or whiteboards and have people write down major ideas. Later in the session, returning to the particular spots in the room where ideas were written as they were discussed will provide a "visual memory" that will help participants remember what was discussed.
- Consider warm-up exercises before brainstorming, particularly if members don't know each other, haven't brainstormed much, or are under a lot of pressure. Here are three techniques to get you started
- Begin the brainstorming session with the slogans of your future competitive advantage. Do one slogan at the time, or, when you work in a group, have subgroups work on a slogan simultaneously
- Rephrase the slogan into a question: What product or service embodies [slogan]? Don't assume too much about how the problem is going to be solved.
- All suggestions are great, even when they seem to suck because the secret is idea building. For idea building, discuss only one innovation at a time. To participate in a particular conversation, contribute by building on the ideas that others have set forth. After one conversation is finished, you can start a new conversation for another innovation.
- Write out ideas and put a sequential number next to each. Numbering helps participants understand how productively their brainstorming is going, and helps people keep track when jumping back and forth between ideas.
- Use plenty of sketches, "mind-mapping," and diagrams, and don't be afraid to act-out or build crude mock-ups of what you are talking about on the spot to make the concepts more tangible and exciting for participants.
From Ideas to Pipeline
When several ideas have been fleshed out, it's time to assess their feasibility. At this point your gut feeling says enough, detailed analysis will follow in the business case modeling. Evaluate the ideas as follows:
- Quick Wins. Doesn't need much budget or significant change in production processes, and its benefits easy to explain
- Potential Blockbuster. Is close to the current competitive edge, but difficult to realize but may yield high returns. This one needs more investigating
- Future Core. Are a few steps removed from the current competitive advantage, but we would have first mover advantage if we realize it. These types of innovation take longer to develop, and will be probably be broken into several releases (like a beta version, a first release, a 2.0 version, and so on). This is done to bridge the gap between the present and future positioning, and to be able to make use of currently still infant technologies
These three categories fill the pipeline: Quick Wins come first, Potential Blockbusters later, and Future Core last. Depending on your scenario timeframe, you may have a pipeline filled for the next 2 to 10 years.
Next step is to investigate further by making the business case and finding a revenue model. And finally, before setting off to the market, please pilot your ideas in a focus group or small market segment. Feedback is crucial, and there's no better than that of real customers.
Benefits of the Pipeline
The major advantage of developing innovation ideas in one go is the coherence in the resulting products and services. Good for the brand, good for the perception of customers, now and in the future.
Other benefits are the continuous flow of fresh products and services to the market, completing your portfolio and taking care of additional revenue.
Action plan 3. Trend monitor
The scenario matrix axes represent multiple developments. Just go back in your notes and disentangle the axes into the separate trends you created them from. Those individual trends are the ones you want to watch for tipping points. Tipping points can be:
- When standard components are used to make the product or technology (price drop)
- When conventional processes are used (scalable)
- When the trend is visible in multiple industries, regions, and markets (big impact)
- When the market moves from innovators to early adopters or grows exponentially (market development
- When market reports start to differentiate market categories (also market development)
- When price competition becomes intense, and companies start merging
To monitor trends and their tipping point, Google will help you better than expensive industry researchers. Industry institutes often are too conservative and not enough out of the box. They monitor trends that influence the present, but in the future other things are more likely to happen.
Using Google for trend research is really easy if you do it right, so here's how you set it up:
Two Fab Apps
My company is small but feisty, so we are automating as much as we can, and try to do it for free. Over the years, a lot of software came and went since we also beta test a lot. Two of the apps we use for our trend research have been with us for a long time and are probably here to stay: Feedly Pro and Evernote. We use Feedly to collect trends for us, and Evernote as an indexed database. The best part is that:
- the apps work on all our devices
- the content is always synchronized because they're in the cloud
- all have Chrome extensions: the buttons in the browser bar saves a lot of site searches, and opening and closing of browser tabs
That's phenomenal when you're a small team scattered all over the place.
Feedly: Feed Reader
Per trend, try many keyword combinations in Google News to get the highest number of relevant articles. When keywords turn out enough, save them as a feed in Feedly Pro.
In Feedly, set up trend categories. Categories allow you to either read per group or read everything in chronological order. Turn the Feedly magazine settings on, which Feedly calls a grid. We find that this gives us the best overview and the easiest read.
Once every couple of days, work through all the articles. Feedly shows the number of new items per category. When pressed for time, just read the categories with just a few entries or one major category.
Another great aspect of Feedly is "mark as read". When you scroll past an article because the headline and excerpt tell you it's not for you, Feedly automatically sets the article's status to read. It saves a lot of time to be able to discard irrelevant material.
Articles that look interesting can be saved by Feedly, but we do our saving into Evernote, which has more tools. So just pick the items you like and check them out. All article headlines are linked directly to the website they were published on. This is not Feedly's standard setting, but it's important always to check our sources, so: change it.
Clicking a headline opens the article in a new browser tab. Browse the article and check its sources. When it's relevant and trustworthy, move the article to Evernote. Then close the tab, go right back into Feedly to find the next headline of interest and repeat.
All third party content gets filed in Evernote in total. Not just the URL. When you get questions or comments in trend analysis discussions, you want to be able to see the actual content again. Can't do that with just the article URL, because a lot of webpages get renamed, moved, or deleted.
Evernote has a website clipper, and it works like you would have used scissors for a regular newspaper. You can clip a screenshot, the whole web page, or just the article on the webpage. Evernote keeps a record of the original URL, the time and place of the clipping, the headline, and the content of the article, including images, video, and pdf. It is The Best Tool.
We used to tag the clippings with our keywords. We don't do that anymore because Evernote itself indexes so well. We use the search bar like we use the Google browser bar, and everything gets listed beautifully. Better even than with our tags. Not tagging saves us a lot of time.
Create several notebooks, one per trend or development. It only takes an hour or so every couple of weeks.
Tips to Make Sense of Trends
When you thumb through your Evernote notebooks, you'll get a feel for the way a trend is evolving, just by seeing the article titles and short descriptions. However, every few months, a deeper analysis is needed. Since these trends point towards your business future, it's not very easy to put numbers on them. A more intuitive analysis is better suited for the assessments of future events.
Don't start trend assessments by making a judgment of relevance to your industry. Instead, sort trends into a pile of those that strengthen corporate values and those you can discard. Sorting on different criteria presents you with a way to look outside your industry while remaining relevant. The extra benefit: it allows for original innovation and improvements to your products and services
If a trend seems unlikely to affect your business, but still feels relevant, try the devil’s advocate. For every development you ask: in what way can we make use of this? This is an especially good strategy if your firm is fixated on the usual management information and discards everything beyond the status quo (also called: the Not Invented Here Syndrome)
One of the best management lessons in futurism is: don’t decide too soon! Postponing your opinion may be your best option. That does not mean discarding, however. Rather, talk to anyone who wants to listen, and ask them for their opinion before making up your mind.