Integrating Weak Signals into Strategic
Corporate Foresight:
A Best Practice Framework for Future Screening
Marc K. Peter, Sydney
11 May 2007
1: Abstract
2: Synopsis of Literature
3: Research Question and Objectives
4: Research Methodology
5: Data Collection and Analysis
6: Contribution and Implications
1: Abstract
Because of the dynamic and fast changing environments of today’s markets and industries, the young field of corporate foresight becomes an important task in strategic planning. Based on a literature review, case study research with two organisations (of which one has a new approach to foresight) and interviews with independent foresight experts and senior managers, a new contemporary approach to strategic planning will be developed. The outcome will be a foresight system that incorporates both weak and strong market signals. It will foster strategic conversations and the building of foresight knowledge which will help companies to keep staying flexible and dynamic and to be prepared for opportunities and threats in the long-run.
2: Synopsis of Literature
In strategic corporate planning, the objective of foresight is to build a bridge from the present to the future in order to reduce uncertainty, and at the same time, to re-educate the organisation and reduce risk (Aguilar 1967; Chia 2004; Cravens 1998; Hamel & Prahalad 1994; Jennings 2001; Karami 2005; Marsh, McAllum & Purcell 2002; Marshall & McKay 2002; Mintzberg 1994; O'Shannassy 2003; Oosthuizen, 2000; Reger 2001; Spence 2003; Wilson 1999). However, strong signals evidenced in past and current behaviour are not necessarily good predictors of future environments (Bell 1997; Fink, Schlake & Siebe 2001; Wack 1985a; Wack 1985b). In addition, companies are now shifting their strategic priorities to managing innovations (Hamel 1998; Kemelgor 2002; Dwyer & Mellor 1993; Wright 2007). Strategic thinking and envisioning, rather than strategic planning, are coming to the foreground in the strategic planning process (ASQ 2005; Carr, Durant & Downs 2004; Choi 2006; Harari 1995; Kouzes & Posner 1996; Mintzberg 1994).
In this more contemporary approach, weak signals (Ansoff 1975, 1982, 1984; Day & Schoemaker 2005, 2006; Jaeger et al. 2001; Mintzberg 1987; Schwartz 1996) in combination with scenario building (Godet 1987, 2001; Porter 1985; Ringland 1998; Schoemaker 1991, 1995, 2002; Van der Heijden 1996) play a crucial role. Weak signals contain poorly conceptualised market information and present opportunities and threats which may emerge over time. The identification and correct interpretation of weak signals, in combination with strong signals, can be vital to the success or survival of a company. Even though there has been significant academic and practice interest in foresight activities, there are only a few empirical studies addressing this phenomenon. In addition, most planning approaches fail to generate and/or manage weak signals within their strategic planning approach, and most of those who do, fail to take advantage of weak signals management (Burmeister, Neef & Beyers 2004;
Clemons & Hann 1999; Fuld 2003; Harris & Zeisler 2002; Hollings 2000; Martinez & Perez 2004; Schwarz 2006).
The literature does not provide an overall strategy framework from signals collection to strategy implementation, as the investigations that have been completed are specifically focussed on either weak signals management (Ansoff 1975, 1982, 1984; Day & Schoemaker 2005, 2006; Liebl 1996) or environmental scanning and strategy adaptation (Fink, Schlake & Siebe 2001; Georgantzas & Acar 1995; Gilad 2004; Ringland 1998; Stoffels 1994; Van der Heijden 1996). Having examined existing literature on strategic planning, strategic thinking, envisioning and innovation, it is concluded that an integrated strategic planning framework from signals collection to scenario building and strategy implementation is not evident in literature and the impact of this approach on business practice is yet to be articulated. The development and empirical investigation of a contemporary approach to strategy development is the core of this research project.
3: Research Question and Objectives
Based on the conclusion from the literature review, the research question can be formulated as follows: “How and why can weak signals reduce foresight boundaries in business strategy development?” In detail, how does a contemporary best practice framework for advanced strategic corporate foresight need to be designed so it is applicable and value generating in a real business environment?
In a traditional approach to strategy planning, the focus is set on situation analysis and strategy formulation without long term focus on weak signals management and scenario planning (Kaplan & Norton 2000; Pearce II 1981; Porter 1985; Preble 1997; Thomas 1984). However, this traditional planning approach is not designed to cope with the uncertainties driven by the fast changing environment (Frost 2003; Karami 2005; White, Conant & Echambadi 2003). It is concluded that the focus of strategy development should be put on strategic thinking, envisioning, innovation management, communication, intuition and creativity. The objective of the research is to develop such a contemporary, future oriented approach for strategy development, where a future screening process is a prerequisite for the situation analysis and strategy formulation. The two elements of future screening and strategic conversations based on strategic scenarios, which were built by combining strong and weak signals,
should help to build an innovation market leadership role. A company who applies this process would be aware of discontinuities and innovation becomes a more central activity. The emphasis on innovation is reflected in the strategy development process, in special methods and techniques, and in a corporate culture which allows change and strategic conversations.
4: Research Methodology
The research consists of an in-depth literature review followed by qualitative interviews and document research with two case organisations in combination with qualitative interviews or e-mail questionnaires with independent and industry neutral foresight experts (senior managers and/or consultants in innovation management and long term planning in large organisations). Based on this, a framework for advanced strategic corporate foresight will be developed and described. If necessary, this framework will again be validated by the group of foresight experts and/or senior managers (CEOs and COOs) to increase the level of validity, reliability and objectivity. Case study research will help to understand this young field of enquiry (Eisenhardt 1989; Leedy & Ormrod 2005, Ticehurst & Veal 2000), especially for the purpose of learning more about this poorly documented issue (Bailey 1992; Cooper & Schindler 2006).
5: Data Collection and Analysis
To understand strategic corporate foresight, the research focus needs to lie with larger organisations where strategic planning is a formal process. A unique situation exists in a large Swiss organisation, where one business unit has substantial experience with a foresight system (this is a leading financial institution), and another business unit (a major passenger transportation company) which has little experience with long term (> three years) strategic planning. This allows an investigation into two business units of one large corporation, where the differences in the business units’ approach in analysing future developments and strategic planning can be analysed and compared. Up to eight interviews per case organisation, each forty to sixty minutes in length, will be conducted with staff actively involved in strategy development. In addition, relevant strategy documentation
will be content analysed to confirm process, involvement and strategy outcomes that emerge from the interview data.
Interview data will be transcribed, then categorised around key constructs contained in the theoretical framework using NVivo software. Emergent themes will be shaped from the data, compared to prior established theoretical positions, then revisited, reviewed, and revised or rejected. Data from the second case will then be categorised and examined for consistency and divergence with the first case (Dey 1993; Ghauri & Gronhaug 2005; Huberman & Miles 1994; Marshall & Rossman 1989; Saunders, Lewis & Thornhill 2000).
With regard to interviews with foresight experts, up to five interviews will be conducted over the phone or by e-mail as these experts reside outside Switzerland and Australia. The experts will be asked to describe best practice methodologies in foresight to capture both strong and weak signals and present their individual conclusions about how combinations of methodologies lead to foresight best practice. Following analysis of the case material, the theoretical framework derived from the literature will be revised, and if necessary, foresight experts and/or senior managers (up to five CEOs or COOs) will be invited to comment on the final best practice framework.
6: Contribution and Implications
The research will enrich the discussion of the immature concept of weak signals management and help to understand the benefits and implications of corporate foresight. It will summarise important, new and relevant findings from theory and practice, identify how a leading retail bank in Switzerland has implemented its corporate foresight system, and propose a model of foresight best practice operating within a contemporary strategic planning best practice system. The outcome of the project is to encourage companies to shift from a traditional approach to strategy development to an integrated framework that enhances strategy decisions in corporate planning and innovation management. This contemporary approach should stimulate companies to look beyond a three or five year planning horizon in strategy development, to strengthen the innovation capabilities and to take better advantage of opportunities and to defend threats in the long run.
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