Getting Prepared for the Future (as an Organization) René Rohrbeck & Christina Bidmon

Getting Prepared for the Future (as an Organization) René Rohrbeck & Christina Bidmon RENÉ ROHRBECK PROFESSOR, DR. RER. OEC. AUTUMN 2015

Christina Bidmon PhD Fellow Aarhus University Rene Rohrbeck Professor of Strategy, Dr. rer. oec. Aarhus University RESEARCH: http://mgmt.au.dk/strategicforesight BLOG: http://futureorientation.net 2

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We often expect that: Running a successful business is about outcompeting our rivals. 4

Would it not be nice if we could systematically prepare to occupy a superior position in an attractive market of the future? 5

WE ARE CURRENTLY IN A TIME WHERE THE AVERAGE LIFE EXPECTANCY OF LARGE FIRMS HAS DECREASED TO ABOUT 25 YEARS. 70 60 Average company lifespan on S&P 500 index (in years) 50 40 30 Projections based on current data 20 10 0 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 6

IT IS NOT A NEW DISCOVERY THAT ORGANIZATIONS NEED TO GET BETTER AT SYSTEMATICALLY PREPARING FOR THE FUTURE. Source: Hamel. G. and C.K. Prahalad (1994) Competing for the Future 7

THE FIRST CHALLENGE IS A LACK OF ATTENTION ON BUILDING A FUTURE PERSPECTIVE Attention on surviving the future of destiny driving towards the future of desire 3% 8

Once we have achieved to shift attention towards building a future perspective we can ask:: What can we do today to build a superior position in the markets of tomorrow? 9

A SMALL TEST HOW WELL PREPARED ARE YOU FOR THE FUTURE? Industry 4.0 Industry 4.0 (or digital manufacturing) is a technological concept composed of different technological elements (electronics and IT) to further automate production. Industry 4.0 technologies include 3D printing, robotics, adaptive Computer Numerical Control mills (machines that cut based on programmed commands) and the use of data tools and analytics across the value chain. Impact: German manufacturers expect a productivity gain of 20 30% (excluding material cost), revenue growth of 30 billion EUR per year, demanding 250 billion EUR in the next 10 years. Digitalization Digitization is expanding from a web phenomenon to impact whole sectors of economies; such is the rapid pace that some have compared it to the industrial revolution. It is transforming jobs, competition, and business models and bringing together the physical and digital worlds. Smartphones are at the forefront of this revolution, extending the platform model beyond consumer communications into goods and services led by firms such as Uber and Airbnb. Impact: Connected devices will grow in the next decade from 9 bn to 50 bn. People state that they use mobile devices to be better informed (86%), travel more comfortable (73%), improve teamwork (45%). 40% of people sozialize more online than they do fact to face. 10

A SMALL TEST HOW WELL PREPARED ARE YOU FOR THE FUTURE? Industry 4.0 Which of these trends are you aware off? Industry 4.0 (or digital manufacturing) is a technological concept composed of different technological elements 2 (electronics and IT) to further automate production. Industry 4.0 technologies include 3D printing, robotics, adaptive Computer Numerical Control mills (machines that cut 3 based on programmed commands) and the use of data have you tools and analytics across the value chain. 1 Digitalization Digitization is expanding from a web phenomenon to impact whole sectors can you quantify of economies; such is the rapid pace the impact you that some have compared it to the your business? industrial revolution. It is transforming jobs, competition, and business models and bringing together the physical and digital worlds. Smartphones are at the forefront of this revolution, extending the platform prepared two or model beyond consumer communications into goods and more alternative services led by firms such as Uber and Airbnb. Impact: German manufacturers expect a productivity gain response of 20 30% (excluding material cost), revenue growth of 30 strategies? billion EUR per year, demanding 250 billion EUR in the next 10 years. Impact: Connected devices will grow in the next decade from 9 bn to 50 bn. People state that they use mobile devices to be better informed (86%), travel more comfortable (73%), improve teamwork (45%). 40% of people sozialize more online than they do fact to face. 11

OUR RESEARCH PROGRAM INCLUDES DEEP CASE STUDIES AND LARGE SCALE BENCHMARKING STUDIES CASE STUDIES 2006-2009 BENCHMARKING STUDY 2008 BENCHMARKING STUDY 2015 Focus on configuration of corporate foresight systems and generic value contributions Focus on the impact of corporate foresight on innovation and firm performance 12

BUILDING A FUTURE PERSPECTIVE INVOLVES BUILDING THREE CORE PROCESSES. 1 Identify 80% key factors that influence your target markets and most of them ahead of rivals PERCEIVING (to achieve lead time in detection of change) 2 Create understanding of interdependency of factors, to prepare and anticipate tipping points PROSPECTING (to built a insight advantage) 3 Monitor and drive influencing factors and enable iterative entrepreneurial bricolage PROBING (competitive advantage) 13

PERCEIVING STARTS WITH BEING SYSTEMATIC ABOUT BUILDING SENSORS THAT DETECT WEAK SIGNALS ON FUTURE TRENDS. 14

CORPORATE FORESIGHT INTEGRATES MARKET AND TECHNOLOGY INSIGHTS ACROSS TIME HORIZONS TO IDENTIFY AND ACT UPON PROSPECTIVE INNOVATION POTENTIAL. New Markets Strategic Coordination New Technologies New Target Groups Tactical Coordination New Sources Market Radar Product Concepts Operational Coordination Available Technologies Technology Radar New Product Concepts 15

PROSPECTING IS ABOUT MAKING SENSE OF THE CHANGE AND COMBINING INSIGHTS TO FORM VISIONS. SITUATION SCENARIOS OUTCOME Nelson Mandela had been released from prison, and the negotiations to end apartheid had begun. A diverse team of South African leaders wanted to work together on how to effect a successful transition to democracy. Source: Deeper News, Vol. 1 No. 7 Ostrich, in which a negotiated settlement to the crisis in S. Africa is not achieved, and the country s government continues to be nonrepresentative. Icarus, in which transition is rapid but the new government unwisely pursues unsustainable, populist economic policies Lame duck, in which a settlement is achieved but the transition to a new dispensation is slow and indecisive. Flight of the flamingos, in which the government s policies are sustainable and the country takes a path of inclusive growth and democracy As a result of this process... the broad outline of a feasible and desirable outcome emerged (Flamingos). This kind of common understanding, together with many other factors, promoted agreement upon a settlement to the crisis. 16

PROBING: USING DESIGN THINKING TO CO-DEVELOP WITH DIGITIAL NATIVES Source: Deutsche Telekom, PCH Innovation http://pch-innovations.com/cases 17

FUTURE PREPAREDNESS IS BUILT BY CONNECTING PERCEIVING, PROSPECTING, AND PROBING WITH CORPORATE ACCELERATION. Corporate Foresight Practices Perceiving Prospecting Probing Corporate Acceleration 2004 Water scarcity as Mega Trend 2004 Water business synergetic with existing energy business 2005 Pilot plant in strategic R&D Center 2005 Acquisition Ionics (water treatment industry) 2006 Acquisition Zenon to secure technology leadership 2013 Energy & Water 31% of GE s EBITA Source: Dr. René Rohrbeck, Corporate Foresight Benchmarking Study 2010 18

OUR RESEARCH PROGRAM INCLUDES DEEP CASE STUDIES AND LARGE SCALE BENCHMARKING STUDIES CASE STUDIES 2006-2009 BENCHMARKING STUDY 2008 BENCHMARKING STUDY 2015 Focus on configuration of corporate foresight systems and generic value contributions Focus on the impact of corporate foresight on innovation and firm performance 19

FUTURE PREPARED COMPANIES ATTAIN BOTH SUPERIOR PROFITABILITY AND VALUATION GROWTH. Future Preparedness PRACTICES CAPABILITIES Organization Information Culture Methods Networks People i +19% 16%* 19%..lead to higher profitability 16% and higher valuation growth 12% 11% ALL FIRMS VIGILANT VULNERABLE IN DANGER NEUROTIC +86% 50% 93% -16% -59% 38% -37% -96% 4% -47% 10% -117% -107% -6% ALL FIRMS VIGILANT VULNERABLE IN DANGER NEUROTIC 20

FUTURE PREPAREDNESS IS ALSO KEY FOR SMEs AND IN PARTICULAR WHEN PREPARING THE HANDOVER TO THE NEXT GENERATION. Corporate Foresight Practices Original company Perceiving Prospecting Probing Acceleration 1868 Successful confectionery shop in Berlin 1899 Building own chocolate factory 1900 Handover to his son when in financial troubles 1906 Many radical ideas on how to respond to industry changes 1908 Launch of radical new product 1970 Merger and final climb to leading global brand Source: Dr. René Rohrbeck, Corporate Foresight Benchmarking Study 2010 21

INNOVATION MANAGEMENT IN LARGE FIRMS COMPETITIVE ADVANTAGE THROUGH THE YEARS TECHNOLOGY PUSH TO MARKET PULL 50s 60s R&D SPENING AND COUPLED PROCESSES 70-80s STRATEGIC INNOVATION PLANNING 90s - 2000s VENTURING AND ENTREPRENEURSHIP 2000s and onwards Dominant position on key technologies and/or market access Dominant position through key capabilities, standard ownership Dominant position through preparing early and handling complexity Dominant position through speed, creativity and fast iterations. 22

API-fication favors small firms over large ones assets of the past are liabilities today. HOW CAN UBER CREATE SO FAST? A LOOK INTO THE BUSINESS MODEL THE BLACK BOX Maps Payment ENGINE ROOM Communication IT infrastructure Algorithm 23

LOW COST EXPERIMENTATION AND COOPETITION LEADS TOWARDS FAVORABLE POSITIONS IN NEW MARKETS. Source: Hamel. G. and C.K. Prahalad (1994) Competing for the Future 24

KEY TAKEAWAYS 1 Shift ATTENTION towards building a future perspective for your organization 2 Build sensors to PERCEIVE weak signals on future change and monitor current drivers 3 Learn and use systems-thinking methods such as scenarios, system-dynamics models and business models to prepare your organization (PROSPECT) 4 Allocate top management attention and budgets to systematically PROBE into new markets 25

LET S WORK TOGETHER 26

WHAT HAVE THESE FIRMS (AND ITS LEADERS) DONE RIGHT TO TURNAROUND The COMPANY That you know in the 90s in the 90s in the 70s in the 2000s 27

WHAT HAVE THESE FIRMS (AND ITS LEADERS) DONE RIGHT TO TURNAROUND The COMPANY That you know in the 90s in the 90s 1 Do some research online 2 Use a flip-chart to collect your findings in the 70s 30 min in the 2000s 28

LET S DISCUSS 29

JOIN THE WORLD-CAFÉ! VISIT TWO OTHER GROUPS AND DISCUSS 5 min x 2 30

LET S CONSOLIDATE 31

GO BACK TO YOUR FLIPCHART AND GROUP 1 Selecto one Key Success Factor per team member 2 Write in BIG letters the KEY TO SUCCESS FACTOR on a A4 sheet 3 Listen up to find out what comes next 32

THANK YOU! Christina Bidmon PhD Fellow Aarhus University Rene Rohrbeck Professor of Strategy, Dr. rer. oec. Aarhus University RESEARCH: http://mgmt.au.dk/strategicforesight BLOG: http://futureorientation.net 33