In my last blog post, I suggested that we’re going through a big shift in strategy from strategies of terrain to strategies of trajectory. In that blog post, I made the case that strategies of terrain are increasingly dangerous in times of accelerating change, but I left you hanging in terms of what strategies of trajectory might look like.
Most strategies (strategies of terrain) tend to look from the present out to the future. Strategies of trajectory start with a view of the future and work back to the implications for action in the present.
Here’s the paradox: strategies of trajectory become more and more essential in times of rapid change and uncertainty, while at the same time becoming more and more difficult. But that’s exactly what makes strategies of trajectory so valuable. Most of us tend to fall back into our comfort zone and just focus on the present, leaving us vulnerable to the changes just ahead. Only a few will venture beyond their comfort zone. Those few who craft strategies to focus action today based on an anticipated future that’s quite different from today will be in the best position to reap the rewards of a rapidly changing environment. They will stand out from the rest of us who are scrambling to respond to the latest event and, in the process, spreading our limited time and resources more and more thinly.
So, what’s required to craft these strategies of trajectory? Five elements can help to make these strategies successful:
In a world of accelerating change, one of our greatest imperatives is to "unlearn" - to challenge and ultimately abandon some of our most basic beliefs about how the world works and what is required for success. But, how do we challenge ourselves when these beliefs are often so deeply held that they are often never even articulated, much less questioned?
I’m a proponent of scenario development as a tool to identify, assess and ultimately achieve alignment around potential futures. One of the great elements of scenario development is that it explicitly starts with the proposition of alternative futures. That in itself helps to pull us out of our comfort zones and challenges our preconceptions about where the future is headed. But, from my experience, this needs to be combined with two other elements to really challenge our most deeply held beliefs about the world around us and about the actions that will lead to success.
First, we need to find people who are deeply creative but from very different domains. Give them a deep dive into our current business and market arenas and then ask them to participate in the scenario development exercise with the specific task of imagining some potential futures that could disrupt our company’s business. It’s important that the scenario development includes people who will challenge the thinking of the leadership team.
Second, integrate the scenario development process with another key question: given the most likely future, what are the two or three business initiatives that we could take in the next 6 – 12 months that would have the greatest impact in accelerating our movement towards the kind of company we need to be successful in that future – and do these initiatives have a critical mass of resources and funding today?
One of the common traps of scenario exercises is that it’s often easy to get senior leadership to sit around a table and nod in agreement to a likely scenario when it is viewed as a theoretical construct with no implications for what one would do differently today. By adding the question about near-term initiatives, it makes clear that this scenario will have significant near-term implications. In my experience, this surfaces all kinds of disagreements that would have been shoved under the rug if the participants believe it will make no real difference to what they do tomorrow. For more exploration of this FAST strategy approach, click here.
Strategies of trajectory can only succeed if the participants are aligned around a shared view of the future. In an exponentially changing world, that future is likely to be quite different from the present. The challenge is to ensure that the participants have escaped from the prison of the present and have a view of the future that is likely given the forces at work on the global business landscape. The good news is that view of the future doesn’t need to be (and, in fact, shouldn’t be) a detailed blueprint. It should be a high level view of key elements that can help us to focus and make difficult choices today.
Here’s another potential problem with scenario exercises. They tend to put us into a passive mindset – we can assign probabilities regarding alternative futures but, at the end of the day, we’re put into the position of analysts on the sideline, simply trying to assess how the future will play out.
What about the opportunity to materially alter the probabilities regarding potential future outcomes? Rather than just focusing on which future is most probable, ask which future is most attractive to the company in terms of positioning it to capture a disproportionate share of economic value. Then ask what actions the company might take to increase the likelihood of that future and to ensure that it is positioned in the most attractive part of the market.
In times of rapid change and growing uncertainty, we actually have far more degrees of freedom to restructure entire markets and industries than in more stable times. Yet, senior executives often fall into a passive, reactive posture in these kinds of environments, rather than exploring how they might proactively shape the future. Shaping strategies are classic strategies of trajectory – they begin by defining a desired market or industry structure and then focus on mobilizing third parties to invest to support the shaping strategy.
I’ve written extensively about the opportunity to pursue a shaping strategy and the three key elements that are key for the success of these strategies, including a Harvard Business Review article summarized here.
These shaping strategies are particularly powerful because they’re highly leveraged on two levels – they mobilize the resources of a large and growing number of participants and they create a rich opportunity for distributed innovation so that everyone learns faster as more participants join.
People tend to magnify risk and discount reward when faced with rapid change and high uncertainty, prompting them to delay action or, at best, to make very modest and tentative moves. Successful strategies of trajectory need to find ways to motivate people to overcome risk averseness and to take bolder action.
Scenarios can be helpful in this regard, but they’re unlikely to be sufficient. Scenario planners tend to emphasize the value of framing scenarios as stories that can emotionally engage participants. I would take it one step further. There’s an opportunity to craft a powerful narrative, one that highlights a compelling opportunity out in the future and that provides a call to action for others to help achieve that opportunity. (For those who aren’t familiar with the key distinctions that I make between story and narrative, check them out here).
Narratives are tailor-made for strategies of trajectory. They focus on defining a future opportunity and then work back to the present by making clear what choices and actions today will help to achieve that longer-term opportunity. Some of these choices and actions are clearly specified, but most are left open to the people we’re trying to reach so that they have room to experiment, improvise and innovate in terms of approaches to achieving that longer-term opportunity.
These narratives become particularly powerful if they’re framed as an opportunity for many others beyond an individual company. They can become a significant source of leverage by motivating others to invest to support and amplify the efforts of a single company.
As the name suggests, strategies of trajectory are ultimately about measuring movement in a particular direction. Any strategy of trajectory must therefore be explicit about the metrics that will indicate whether we’re on track to establishing the desired position in the future.
Two important points about metrics. First, resist the temptation to focus on financial metrics. These are lagging indicators telling us how we have done. Wherever possible, identify operating metrics that are effective leading indicators of the kind of performance you are seeking to achieve. And focus on operating metrics that are specific to the desired position in the future even if these operating metrics are marginal to your current business performance. For example, if your strategy is to become a “trusted advisor” to customers in a particular domain, focus on the number of proactive recommendations you provide to relevant customers and the response rate of these customers.
Here’s the second point. Forget about performance snapshots that focus on your performance at any specific point in time. Strategies of trajectory focus on acceleration – they’re about performance over time. Is your performance stable, increasing linearly or accelerating? If it’s not accelerating in an exponential world, something is wrong. So, strategies of trajectory are relentlessly focused on patterns of movement over time.
In a time of accelerating change, learning is essential to success. Whatever we know today is depreciating in value at an increasing rate. Strategies of trajectory are ultimately about how to accelerate learning at scale. In fact, the four elements explored above each contain a strong learning component.
No matter how fast things are moving, there’s a paradox: the more time we take to reflect on our experiences, the faster we’ll be able to move. But this only works if we have a destination in mind. Without a destination in mind, we will surely learn from our experiences but the learning will be random. If we have an idea of where we’re headed, then we can profit much more from reflecting on our near-term initiatives and assessing how effective they are in accelerating our movement towards our destination.
And, by the way, we’ll also learn a lot more about the destination we’re striving to reach. Part of the learning process is to continually step back and ask how we might refine our view of the destination to help us make even more progress. That’s the power of the “zoom in, zoom out” approach in the FAST strategies discussed earlier – we’re constantly striving to learn more about the nature of the destination and about the approaches that will accelerate our progress. The key is to carve out the time to reflect on what can be learned from the progress (or lack of it) that we’ve achieved and to adjust our actions accordingly.
Forget about the path in front of you, no matter how familiar or well paved it might be. First, figure out where you want to be, then craft the path that will be most likely to get you there quickly. The terrain around you today is important, but only to the extent that it provides resources to support you in the journey to the terrain that’s already taking shape under the surface.
If you’re not continuously operating on two horizons simultaneously – a five-ten year horizon and a six-twelve month horizon – and rapidly iterating back and forth between these two horizons, you’ll quickly get sidelined. But just remember, there’s a very big upside: in an exponential world, small moves, smartly made, can set very big things in motion.
Some additional resources
In my quest to craft strategies of trajectory, I’ve been influenced by the following books, many of them ironically written over a decade ago:
Hugh Courtney, 20/20 Foresight
Gary Hamel and C. K. Prahalad, Competing for the Future
Bob Johansen, Get There Early
Peter Schwartz, The Art of the Long View