Strategic foresight and 6 megatrends that will change your life

Applying foresight to the process of developing your corporate strategy adds a new dimension to managing risks and identifying opportunities for your company. I particularly enjoy the process of exploring global trends and applying that thinking in order to identify strategic focus areas.

The purpose of foresight is not to predict the future; rather, it is to apply trends or megatrends to your current situation in order to assist you to plan for tomorrow and beyond. In our increasingly globalised and volatile world, where change is the only constant, reviewing global trends to understand their influence on a country, sector or company is becoming all important. The foresight approach is an alternative to traditional tools, such as looking to the past, in order to develop a plan for the future.

The growing importance of strategic foresight is why you should read CSIRO’s latest update of Global Megatrends. CSIRO’s first megatrends report was released in 2010. Last week, a new report, Our Future World – global megatrends that will change the way we live was released. It describes six megatrends that will influence our social, economic and environmental futures.

The megatrends that will have a significant influence over our lives in coming twenty years are:

  1. More from less – growing pressure on our natural resources.
  2. Going, going, gone – the decline of natural habitat, plant and animal species.
  3. The silk highway – the rise of the Asian century.
  4. Forever young – the impact of our aging population.
  5. Virtually here – increased connectivity.
  6. Great expectations – personalised services.

I think it is pertinent that one megatrend remains essentially the same between 2010 and the revision of 2012 – “More from Less”. This megatrend is a reflection of increasing demand for resources; food, minerals, energy and water, by an ever increasing global population and growing developing economies.

If we apply this megatrend to the manufacturing sector, we can forecast that sustainable industry concepts such as eco-efficiency, closed loop manufacturing and zero waste will provide benefits to those companies that succeed in implementing them. Furthermore, the ‘more from less’ megatrend reflects the increasing importance of resource efficiency which will drive innovation. Smart companies will pursue resource efficiency to reduce costs. Truly innovative companies will pursue resource efficiency to drive strategic advantage.

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Women on Boards – a case for diversity

A few years ago, I attended a meeting at an organisation with some of my colleagues. After introductions from both companies were made, the senior manager remarked on the quality of his organisation, particularly, the diversity in his company. The speaker’s numerous colleagues shuffled awkwardly in their seats as I was the only women in the room, and this resulted in nervous laughter at the irony of the situation. The same manager then steadfastly refused to engage in a discussion on environmental risks, going to the length of threatening to throw us out of the room if we wanted to discuss ‘fluff’. Less than a year later, the organisation went spectacularly out of business leaving shareholders and investors out of pocket. I often reflect on that memorable meeting and wonder about the type of company culture, obvious lack of diversity, and the role it might have played in the company’s demise.

The representation of women in executive management and on boards is woeful. The UK recently reported an increase over the last year from 12.5% to 15.6% in the proportion of women on boards. This news is pleasing although 15% remains a paltry representation of women at the senior level of the corporate world.

In Australia, the representation is an even lower 13.5%, although this is a jump from 8.5% in 2010. The increase could be due to improved awareness to increase diversity at board level or a reaction to federal government warnings that quotas may be considered if Australian companies don’t lift their game. While Australia lags behind the UK, the increase is a step in the right direction. After a little searching, I discovered Women on Boards which is an Australian company that works to help improve the number of women on boards.

The latest McKinsey Quarterly has an article reporting research into the relationship between top performing companies and their gender and cultural diversity on executive boards. They found companies in the top quartile of executive board diversity had returns on equity that were 53% higher than those in the bottom quartile. While the research is acknowledged as not being conclusive, it suggests corporate diversity is indicative of top performing companies.

The case for diversity at the senior levels of corporate governance is a case against ‘group think’. If a team comprises a mixture of age demographic, gender and race, this will increase the quality of discussion and improve decision making. I guess one could compare this to the natural world, where levels of biodiversity are indicators of the overall health of a system. It is my hope that levels of diversity in senior leadership teams, including boards, continue to climb, so companies are more resilient, financially and socially sustainable.

 

Creative Collaboration and the New Share Economy

I’m online at the Verge conference in Washington DC, listening to Lisa Gansky talk about “The Mesh” and how the next Big Thing in business will be, believe it or not, ……sharing.

The Mesh is a business model that generates value and creates a new business ‘ecology’, through the collaborative use of data and social media. This data driven business model is enabled by sensors, which are getting smaller and cheaper, and open access to data used in creative ways. Lisa authored a book titled “The Mesh” in 2010.

While listening to Lisa’s talk, I thought it sounded familiar. In early 2011, I read a Harvard Business Review article by Michael Porter and Mark Kramer “Creating shared value”. Porter and Kramer’s vision of ‘shared value’ is achieved by redefining products, markets, productivity and creating clusters to derive economic value from addressing social problems. The difference between these two concepts is Gansky is more focused on the collaborative use of data and entrepreneurial value. While Porter and Kramer focus on the connection between social and economic goals.

In the search for new business models that support sustainability goals, Gransky, Porter and Kramer have hit on something creative and innovative. Shared value can be service driven value, leveraging data, mobility and the internet age. One’s imagination and creativity becomes the limiting factor for understanding how this concept might apply to your sector or organisation.

Now, back to Lisa’s presentation at the conference. To illustrate The Mesh, Lisa articulately described unused business assets as waste. Recognising a potential opportunity, savvy people have converted unused waste into creative business ideas.

Let’s take car sharing. Did you know that we only use our car 8% of the time? The remaining time it sits unused. Whip Car is a peer to peer model where you can access, for example, your neighbours car and free up this asset during its unused time. How about unused office space? Loosecubes is a company that markets spare, commercial office space, around the world. Should you need office space in Brazil for 3 hours next Monday, Loosecubes can help you. These companies expand the utilisation of unused assets. Lisa Gansky says, “The Mesh is where access trumps ownership”.

The corporate sustainability journey can be a long one. if you are looking for ideas on how your company can progress in from a cost reduction focus to value creation, then think about generating shared value and check out the links embedded in this article.

6 Strategic Factors

During my research in corporate sustainability, I have identified six strategic factors critical to successfully integrating sustainability throughout an organisation. The degree to which these factors are adopted, indicates the level of engagement from organisations. These are the most common factors that continue to crop up in academic literature and important areas to address when embedding a new strategy within an organisation.

1. Mission

An internal and/or external mission statement frames an organisation’s definition of corporate sustainability. One of my first blogs discussed the importance of individual companies defining the context of sustainability relevant to their organisation and its unique operations and impacts. A tailored mission or vision statement defines the company’s goal and how sustainability is relevant to that goal.

2. Leadership

There are two elements to sustainability leadership; organisation structure and communication. Firstly, an executive level role, responsible for the company’s sustainability objectives clearly identifies sustainability as important to the organisation to implement, monitor and manage. Secondly, the entire leadership team should be effectively communicating the sustainability strategy, mission and values of the organisation to staff and external stakeholders.

3. Culture

Addressing corporate culture; those commonly held workplace behaviours, values and attitudes, are an important part of embedding a shared vision of sustainability. Culture is the yardstick for measuring how successfully a sustainability strategy has been integrated throughout the organisation.

4. Reporting

Publically reporting on sustainability metrics, for example, using the Global Reporting Initiative (GRI) is an important practice. It is a powerful communication tool for organisations, and serves to enhance credibility and reputation in the marketplace.

5. Policy

Internal policies and systems are important for addressing organisational operations, activities and processes. They are the terms of reference for “the way we do things around here”. Examples are; a sustainable procurement strategy, health and safety system, energy, carbon and waste policy or ethical business policy.

6. Engagement

Identifying stakeholders as broader than those with a financial investment in your organisation is a first step. The next step is to proactively engage with your stakeholders. This signifies a shift from managing the organisation’s financial investment to managing the impact of operations with society or specific groups that may be affected e.g. consumers, community, NGO’s and government.