The 4 things essential for any successful business.
Hindsight, oversight, foresight and insight.
Hindsight is the understanding of an event or situation only after it has happened. It’s the super power we’d all love to have. While hindsight would have proved useful to Kodak, it’s the practice of learning from hindsight that many businesses miss. For many companies failure is a big ‘no, no’. Many companies launch programmes and initiatives that fail and are never spoken of again. Many managers will admit to a company’s past failures but few will truly understand why these failures happened. Failure becomes clouded in hearsay and multiple versions of the truth. The outcome is a business that fails to learn and becomes indecisive, scared of making future decisions.
This can be an energy-sapping problem for any company. It’s critical for businesses to be able to identify why a failure occurred, what can be learned from it and how it can be prevented from happening again. Hindsight is a wonderful thing but so too is learning.
Oversight can mean supervision, care or management. For businesses such as Enron and Worldcom oversight was missing entirely. In both cases there was deliberate and planned deception and legal wrongdoing. Picking two companies felled by accounting scandals is a good example of how important oversight is.
Many companies have gone to the wall due to weak boardrooms, laissez faire management styles and wilful ignorance. Businesses with strong oversight capabilities tend to have powerful boardrooms with elements of independence. They have active shareholders who are good at probing management and challenging where necessary. These companies also have rigorous reporting tools combined with independent and probing auditors.
Foresight is the ability to predict what will happen in the future. For businesses, prediction isn’t easy. It’s difficult to know if your sequel app is going to be as roaring a success as the first. It’s hard to know if your travel app business will take off in China as it did in California. The difficulty shouldn’t cloud the importance for businesses in having a foresight capability.
Many companies lack a centralised function that combines both strategy and foresight planning. Strategies are developed in the here and now with only a slight nod at what might be coming in the next few years. Today’s companies are designing strategies for 2020 and 2025 often with little or no understanding of what the future might hold.
Foresight is also about modelling possible scenarios and future outcomes. It’s about businesses stress testing ideas and strategy against possible futures and scenarios. Strong companies have dedicated people whose sole purpose is to predict the future. To enable foresight there needs to be good modelling. By using historical data combined with evidence guided assumptions, businesses can model the future. In doing so they work out risks in workshops rather than the real world.
Almost certainly the most overused word in business. Insight is about gathering a deep understanding of something or someone.
Insight can be gathered from many sources whether internal or external. Businesses can buy in data from which to identify, interpret and gain insight. They can observe customers to identify behaviours and trends. They can hold focus groups and conduct surveys. For all the attempts many of today’s businesses are data rich and insight poor. Few really understand their customers and many wander lost in a world of big data and data lakes.
Insight doesn’t need to be expensive. Businesses can gather data and harvest insight with relatively little overhead. Blockbuster could have saved their business by watching customers engaging with YouTube. By observing consumers willingness to stream video, Blockbuster may have agreed to Netflix’s famous $50m offer.
Businesses with a strong insight capability have good researchers. They know the answers they need to find. They ask the right type of questions. They are good at spotting noise and identifying relevant, valuable insight. They realise the importance of issuing reports with the starting point of ‘so what?’.
For larger businesses it’s about having dedicated resources to manage insight and research tasks. They tend to operate a central team that manages quantitative and qualitative research holistically. By doing this they can find hidden gems by cross-referencing research results and outcomes.
For all businesses the 4 lines of sight are critical to success.
Hindsight is impossible but learning from mistakes isn’t.
Careful and robust supervision is about good governance and mitigating harmful threats.
Trying to anticipate the future is hard but sensible for any business wanting to grow.
Insights can be rare but when found they open up a world of opportunity.
At Strategy Activist we help clients develop their four lines of sight.
We help them learn and develop from past failures. We help them understand failure and how it can be turned into success.
We craft strategy together using futurology. We stress test strategies and ideas using scenarios and modelling.
We aid clients in building robust governance structures, practices and procedures. We provide clients with audits on their checks and balances.
We help clients develop a real understanding of their customers. We conduct research, design surveys, implement dashboards and grow insight teams.
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