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Corporate Foresight
Abstract Anchor Paper for the International FTA Seminar, Seville, Sept. 2006
Kerstin Cuhls, Ron Johnston
This paper addresses Foresight (and Forecasting) in the business sector. While much of the emphasis of FTA has been on their use by governments, and more broadly the public sector, there has been a marked increase in its application to a range of issues in business. The generic term most commonly used is ‘Corporate Foresight’ (e.g., Burmeister/Neef/Beyers 2004), which can mean very different things. On the basis of differences observed in the practice of this corporate foresight, this paper distinguishes between ‘foresight in business’ and ‘foresight for business’.
1. History of Corporate Foresight
The modern history of the application of FTA to business can be traced to the 1960s, when companies were included in the national forecast (today we would say foresight) activities in the U.S.A. (Gordon/ Helmer 1964) or in Japan (Kagaku Gijutsuchô Keikakukyoku 1971). This was also the time, when first scenario approaches were tested (Kahn). The failure to predict the oil crisis of 1972 and the generally sceptical reception of the ‘Limits to Growth’ report by Dennis Meadows (1972) to the Club of Rome in the same year produced a general downturn of interest in addressing the future. This reaction was somewhat curious, given that it was precisely the application of scenario planning by Royal Dutch Shell to the future supply and price of oil (see e.g. Schwartz 1991, Van der Heijden 1997), that enabled them to move from 6th to 2nd among the ‘Seven Sisters’ of the petroleum industry. Nevertheless, during the 1970s the emphasis switched to predicting the diffusion of technology, via the S-curve (eg Pry, 1974), and the ‘assessment’ of technology (as typified by the work of the US Office of Technology Assessment from 1974).
In the 1990s, as national governments became more active in foresight, large companies such as Philips, Lucent Technologies, Siemens, DaimlerChrysler and of course Shell had already developed their own systems of looking into the future and drawing conclusions to feed into their planning. The methods of choice were based on patent analysis, literature analysis, scenarios, surveys, sometimes even in the form of a Delphi, and technology roadmaps (Reger et al. 1998). The most popular of these techniques with business were roadmaps and scenarios. Since then, the use of foresight has spread around the world. Networks and alliances were established to facilitate this, such as EIRMA in Europe and the Global Business Network in the US.
2. Foresight in Business
Foresight in business is conducted in a company, in most cases by the company itself, though sometimes assisted by external facilitators or advisors. One challenge in identifying foresight in business is the variability in usage of terms: foresight and forecasting are frequently interchanged, or not used at all in favour of the more familiar strategic planning and management. Some applications of foresight are:
2.1 Foresight for strategic planning
This commonly occurs in companies that have their own strategic (planning) departments. These are commonly larger companies such as Siemens AG, DaimlerChrysler AG, BASF AG in Germany, Lucent Technologies in the U.S.A., or Philips in the Netherlands. In many cases, scenario planning approaches from the different “schools of thought” are applied, such as Godet (1997), the US Global Business Network, the “Nixdorf School” (Fink/Schlake/Siebe 2001), Ringland (1998), Schwartz (1991), Van der Heijden (1997) or von Reibnitz (1988). The results of these activities are generally directly used for strategic vision building or planning and have a direct internal impact.
2.2. Foresight for marketing
While less common, foresight for marketing has been used to raise general societal issues by companies like Janssen Cilag (health), or Siemens (Horizons, Pictures of the Future). These activities are used to position the company as a “responsible partner in society”. The impacts of these activities on the company or society are difficult to evaluate but nevertheless real.
2.3 Foresight for organisational change
In some cases, companies engage in foresight to provoke organisational changes. In most cases, they aim at a re-structuring of the internal organisation as a reaction to events to come. However, in many cases, internal resistance to change is so strong that there is limited impact. An example is German Telekom (Reger et al. 1998) which aimed to install a foresight system but concluded that there was already a significant level of foresight being conducted, under various names.
2.4 Foresight for innovation
A number of larger companies, such as Hewlett-Packard, Intel and Google have pioneered the use of ‘predictive markets’ as a way of tapping and applying the knowledge and experience of all their staff in making judgments, through a virtual trading mechanism, about likely future directions of technology development.
3. Foresight for Business
This category involves the application of the results of foresight activities performed outside a business. Here, often, the activities are not directly tailor-made to the objectives of the companies. These include:
3.1 Making use of the results of national foresight activities
One of the most popular approaches is using data (e.g. surveys, Delphi results) from national foresight activities for business and especially for strategic planning purposes. Japanese companies have reported effective use of the results of the regular NISTEP Delphi reports. (NISTEP, 2004). Similar findings have been made for German industry (Cuhls/ Blind/ Grupp 2002).
3.2 Foresight by Industry Associations
Industry associations have conducted foresight exercises or analysed the results of national foresight activities to their members; eg the German ZVEI (electro technical association) and the VDMA (machine tools).
3.3 Foresight by Foundations
Foresight by Foundations is normally targeted at setting priorities or providing information for society (e.g. European Science Foundation) or companies, particularly SMEs. The German Stiftung Industrieforschung, which provides money for research institutions that work with SMEs, performed two foresight projects to identify interesting thematic fields that will be supported in the following year.
3.4 Multi-client studies
There is also potential for foresight as a multi-client study. These studies are often financed by the companies themselves or by e.g. a ministry, the European Commission or an association (see above) to promote things to come (e.g. HyWays, www.hyways.de, an international consortium to promote hydrogen infrastructure). In these cases, there are direct impacts on companies because the objectives and methods of the studies are tailored to their needs.
4. Impacts
It can be concluded that there has been a very substantial growth in the application of FTA in the business sector, with a range of diversified impacts. In some cases, direct consequences flow from the foresight e.g. new business areas, new products, new production procedures, new strategies and targets, and new forms of organisation. However quantifying the precise benefits probably remains a long-term goal.
5. References
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Cuhls, K.: From Forecasting to Foresight processes – New participative Foresight Activities in Germany, in: Cuhls, K. und Salo, A. (Guest Editors): Journal of Forecasting, Wiley Interscience, Special Issue, no. 22 (2003) pp. 93-111.
Cuhls, K.; Blind, K. and Grupp, H. (2002): Innovations for our Future. Delphi '98: New Foresight on Science and Technology. Technology, Innovation and Policy, Series of the Fraunhofer Institute for Systems and Innovation Research ISI no. 13. Physica Heidelberg.
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Godet, M. (1997). Scenarios and Strategies. A Toolbox for Problem Solving, Cahiers du LIPS, Special Issue: Paris.
Gordon, T. J. and Helmer, O.: Report on a Long-Range Forecasting Study, Rand Corporation, Santa Monica/ California 1964.
Kagaku Gijutsuchô Keikakukyoku (Hg.): Gijutsu Yosoku Hôkokusho (Bericht zur Technikvorausschau), Tôkyô 1971.
Kahn, H. and Wiener, A.: Ihr werdet es erleben. Voraussagen der Wissenschaft bis zum Jahre 2000, Wien/ München/ Zürich 1967.
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Meadows , D.H, Meadows, D.L., Randers, J., and Behrens, W.W. (1972): Limits to Growth, Potomac Associates, New York.
Pry, R. (1974): Forecasting the Diffusion of Technology in Cetron, M., et al (eds) Technology Transfer, Noordhoff, Leiden, 227-246.
Reger, G.; Blind, K.; Cuhls, K. and Kolo, C. (1998): Technology Foresight in Enterprises. Main Results of an International Study by the Fraunhofer Institute for Systems and Innovation Research (ISI) and the Department of R&D Management, University of Stuttgart, Karlsruhe/ Stuttgart.
Reibnitz U. von (1988): Scenario Techniques, McGraw-Hill Book Company GmbH, Hamburg
Ringland, G. (1998): Scenario Planning: Managing for the Future. John Wiley: Chichester.
Schwartz, P. (1991): The Art of the Long View: Planning for the Future in an Uncertain World, Currency and Doubleday: New York.
Van der Heijden, K. (1997): Scenarios. The Art of Strategic Conversation. Wiley: Chichester.
G:\etepsftaseminar2006\corporateforesight.doc 15.05.2006 10:04 Kerstin