The benefits of strategic foresight
Strategic foresight is the ability to predict likely changes in the industry and firm environment. Some key benefits of this include:
Identify opportunities before other firms
One of the primary benefits of strategic foresight is being able to recognize opportunities before other firms. Sensing changes in customer preferences or technology changes can help you identify new market opportunities before other firms are able to do so.
The earlier you can sense opportunities, the better placed you are to build up the necessary resources and capabilities, and develop an early lead in the new markets.
Adapt to move away from threats in the environment
As well as being better placed to capitalize on new opportunities in the environment, having strategic foresight of the changes going on in your environment also better place you to make necessary changes to avoid environmental threats. The earlier you are able to sense the need for change, the better placed you will be to make a strategic pivot relative to your competitors.
Dimensions to develop foresight on
- Technology advancements: New technologies that may influence your products, services, or manufacturing process.
- Social trends and customer demands: Trends that could influence demand for your product or service, the creation of new opportunities, or
- Competitor actions: New products, investments, and decisions made by current or new competitors.
Beyond the above factors, each of the other PESTEL components are possible areas that can impact your industry.
Approaches for developing strategic foresight
- Reading the news – and connecting it back to your firm and industry: One of the primary ways of developing strategic foresight is reading the news – making sure that you are aware of changes, including those outside of your market. For every news article that you read – try and connect it back to your industry – is there an impact that this could have on your firm.
- Specifically applying strategic frameworks: Coupled with building your understanding of the environment, it is useful to systematically apply strategic frameworks – including the PESTEL framework and Porter’s Five Forces framework. These frameworks help ensure that the key dimensions are considered – that you don’t miss key changes in your environment.
- Speaking with customers: Another important way of increasing strategic foresight is to speak directly with customers. The more that you engage with your customers (and maybe especially lead customers), the better placed you to identify new demands and changing expectations.
- Monitoring industry trends: Another important component of developing strategic foresight is to directly monitor your competitors – what are the actions that they are taking, and what are the gradual changes that are occurring in your broad industry.