Backcasting? Forecasting? What Will Your Business Future Look Like?

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Reverse-engineering of futures, or backcasting, is a process that was described by John B. Robinson, associate professor in the department of environment and resource studies at the University of Waterloo, Ontario, Canada. The concept for business creates tools to turn a vision into reality.

How often have you heard the phrase, “start with the end in mind”? Without an organized strategy, intended change can disintegrate into a set of unrelated and confusing directions and activities. Business consultant Randy Emelo, who focuses on corporate mentoring to develop inclusion and diversity, notes four important steps in using foresight to develop a vision: collaboration from people of different corporate levels and perspectives; reflecting on the past; sorting through the long-term implications of trends for unexpected challenges and unexploited opportunities; and gauging the required commitment for each opportunity and assessing its impact.

Backcasting reminds its participants that the future is not linear. In forecasting, the organization may be taking steps that are primarily a continuation of present methods extrapolated into the future. For example, in 2022 your company sold 15,000 widgets at a sales volume of $300,000. A forecast for your industry indicates that a sustainable sales growth is 4 percent. In 2023, management can expect, or plan for, sales of 15,600 widgets and a volume of $312,000, and determine if additional manufacturing or sales staff needs to be hired to meet that goal.

The traditional process of strategic planning has two traps, according to innovative consultants Mark Johnson and Roy Davis of Innosight. “The first trap is about getting stuck in the present; the second trap is about getting stranded in the future. First, the ‘present forward mindset’ holds the assumption that the company’s existing business can simply be extended into the future,” they write. The other trap is that open-scenario planning exercises with no strategic follow-up result in highly abstract vision statements or promises of the company’s glorious prospects in a brave new world without an achievable plan. “The typical annual planning process is often just a mechanistic budgeting exercise. The current state of the business dominates the discussion. The time horizon is restricted to two or three years ahead. Inevitably, the plans that emerge focus largely on incrementally improving the core business,” Johnson and Davis note. It may sound like a cynical comment, yet it indicates that a better approach is needed that enables participants to identify a plan for the future that can be started today.

A company that chooses to change its planning method to backcasting envisions becoming a learning organization in which participants can align on steps to meet the desired future goals.
Business strategists can help a company with the process, but forward-thinking executives can also get it started. It’s crucial to have a clearly articulated vision combined with a clearly articulated road map to increase the potential for success.

“Visioning” is one component, and a normative approach is needed, since the most likely future may not be the most desirable future. Backcasting coaches and innovators encourage a company to determine the physical and economic feasibility of a particular future and the actions required to reach that future. It’s also important to consider undesirable futures and mitigation and response to these.

Questions to ask within management discussions that establish buy-in and mutual commitment to goals include: What are market and competitive realities? What potential crises and opportunities are on the horizon? What leaders within the company have the power to develop a team? How do we communicate our new vision? How do we deal with obstacles to change or forces within the organization that undermine the vision? How do we encourage risk-taking? How do we recognize short-term wins and improvements, and then recognize and reward those who implemented them? What in our company culture must change to achieve the future outcome? At what point do we hire, promote and develop new team members who can drive the vision forward? And importantly, how do we make clear that corporate success is due to this change, and how do we ensure leadership development and succession?

The world has seen disruptive change created by innovators such as Uber, Amazon, Netflix and concepts such as driverless cars, 3D printers and drone delivery. As such, it’s about more than products; it’s about behaviors. Disruptive innovators ask questions such as, what are the cultural, consumer and technology trends that influence the products we design? What do our customers value or expect?

Philosopher Søren Kierkegaard said, “Life can only be understood backwards; but it must be lived forwards.” Backcasting anticipates the need for change as well as the need to thoughtfully manage it. Being proactive typically creates more value than being reactive.

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