This article, by John C. Camillus, was originally posted on CMSWire.com, July 22, 2016.
Companies embarking on globalization are thrust literally and metaphorically into a world of uncertainty and complexity.
When the power and priorities of multiple and diverse stakeholders interact with the complexities and uncertainties of globalization, the result is a recipe for decision paralysis.
Not only does the firm’s future become difficult to predict, but also the extreme uncertainty and complexity that accompany globalization, when compounded by the different perspectives and priorities of diverse stakeholders, may lead to a chaotic ambiguity where the future is not only unpredictable but essentially unknowable.
Grappling with Uncertainty
Unknowable futures are the reason why firms that employ the best of the traditional planning processes and analytical techniques are sometimes unable to gain any traction.
Traditional tools of strategic analysis are designed to understand and predict competitive industry environments (e.g., five-forces analysis) or develop differentiation maneuvers for an anticipated future (e.g., generic value chains linked with customers’ or supplier’s chains). However, they are patently unsuited for and utterly helpless to deal with an unknowable future.
Additional approaches also fall short.
Conducting strategic planning exercises more frequently, requiring additional analysis, separating strategic thinking from action planning, or using carefully developed return on investment (ROI) projections as a basis for selecting strategies are of little worth when challenged by this degree of uncertainty and complexity.
Traditional Tools Aren't Working
Unknowable futures are no less unambiguous when subjected to more frequent traditional analyses.
A greater degree of analysis is a waste of time and effort if it is predicated on incorrect or questionable assumptions.
Understanding the implications and the implementation challenges of new strategies are next to impossible without simultaneously exploring the feasibility of actions required to fulfil the strategy.
Faced with the probability of incorrect assumptions, unanticipated developments, and undeveloped action plans, employing ROI projections as the criterion for selecting an optimum strategy is dysfunctional at worst and an exercise in futility at best.
What, then, can an organization do in the face of an unknowable future?
Understanding Wicked Problems
A couple of decades ago, in my consulting, I became aware of the ineffectiveness of then available techniques that were intended to delineate or deal with an anticipated future.
I started searching for, researching, designing, and documenting planning processes that could better manage an unknowable future. The result was an article I co-authored with Dr. William Gilmore that deconstructed what we categorized as “wicked” problems, and we recommended processes and techniques that would, we believed, be responsive to these issues.
These processes and techniques are better informed now by the multi-year, multi-country research projects and extensive consulting I have done with more than 100 organizations, ranging from Fortune 500 companies to theological seminaries.
A key component of these processes is a “feed-forward” approach to planning and control.
Solving Wicked Problems
Feed-forward-based planning and control processes work from the future backward, as opposed to the classical, feedback approach, which seeks to draw lessons from the past.
Feed-forward is an important and powerful approach to meeting the challenge of wicked problems. Traditional planning and control systems rely substantially on feedback — which means learning from experience and analyzing actual performance in relation to planned performance.
Disruptive technologies and wicked problems delink the future from the past, making traditional systems inadequate. The new models that result from co-creation of value could make the disconnection even greater.
Feed-forward processes and techniques address the disconnect that exists from the past by guiding management in making choices today by working back from an anticipated or desired future, without necessarily relying on past experience.
Feedback vs. Feed-Forward
Feedback is basically an exercise in remediation: correcting, learning from, and improving upon performance in an existing business.
Feed-forward focuses on fashioning a future — a future that may be unrelated to the past — that the firm wishes to see happen.
Feedback essentially involves performance appraisal and learning, while feed-forward focuses on managing uncertainty and an unknowable future.
Feedback-oriented systems engage in episodic reviews of performance at specified intervals of time — say, monthly, quarterly or yearly, while feed-forward-oriented systems trigger analysis whenever assumptions that have been made appear to be mistaken and new issues are spotted.
Feedback employs databases that collect historical data, while feed-forward works with information and insights derived from possible future scenarios. In short, feedback analyzes the past and feed-forward strives to envision and realize a desired future.
It is important to emphasize that feed-forward often requires a leap of faith. The business model will have to assume cause–effect relationships that have yet to be demonstrated or proven.
It would be unreasonable to expect that every such cause-effect assumption will prove to be valid. Setbacks and failures will occur. Managers and especially the C-suite need to be prepared to take these failures in stride but to also examine whether the logic underlying the assumptions of cause–effect relationships is sound.
Managers, paradoxically, have to commit to an untested cause-effect model to the extent of investing resources and unreserved effort into making it work, but at the same time be actively examining if the cause-effect model is valid.
This is difficult to do, though utterly necessary. Some years ago, when I had the occasion to speak with the top management of Fujitsu, I asked them how and when they determined that a strategic initiative or major project was a failure.
They patiently explained that my question had no meaning in the Fujitsu context. In Fujitsu, when initiatives or projects did not progress as planned, management’s focus was on what needed to be done differently, not on labeling the initiative and the responsible managers as failures.
Similarly, in a feed-forward context, well-planned and thoughtfully implemented initiatives are experiments that provide a better understanding of cause–effect relationships and underlying assumptions.
Feed-forward is inherently inclined to render existing value propositions and business models obsolete.
This is not a bad thing if the firm at the same time strives to keep the existing business going until it is evident that the emerging business model dominates. A flexible and dynamic approach to the firm’s organizational structure will be needed to execute this complex balancing act well.
Title image "Rainy Day Business" (CC BY-ND 2.0) by Tjook
About the Author: John C. Camillus is the Donald R. Beall Professor of Strategic Management at the University of Pittsburgh and the author of Wicked Strategies: How Companies Conquer Complexity and Confound Competitors (Rotman – UTP Publishing).