Corporate foresight has been conceptualised by

strategic foresight Strategic foresight is a planning-oriented discipline related to futures studies. In a business context, a more action-oriented approach has become well known as corporate foresight.Rohrbeck, Rene (2010) ''Corporate Foresight: Towards a Maturity Mo ...

practitioners and academics working and/or studying

corporations A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal context) and r ...

as a set of practices, a set of capabilities and an ability of a firm. It enables firms to detect discontinuous

change Change or Changing may refer to: Alteration * Impermanence, a difference in a state of affairs at different points in time * Menopause, also referred to as "the change", the permanent cessation of the menstrual period * Metamorphosis, or change, ...

early, interpret its consequences for the firm, and inform future courses of action to ensure the long-term survival and success of the company.Rohrbeck, Rene (2010) ''Corporate Foresight: Towards a Maturity Model for the Future Orientation of a Firm'', Springer Series: Contributions to Management Science, Heidelberg and New York,

Motivation

* The ''high mortality'' of companies that are faced by external change. For example, a study by

Arie de Geus Arie de Geus (born 1930, died 2019) was a Dutch business executive, business theorist and scenario planner, who was the head of Royal Dutch Shell's Strategic Planning Group and was a public speaker. Life and work De Geus was born in Rotterdam in ...

Royal Dutch Shell Shell plc is a British multinational oil and gas company headquartered in London, England. Shell is a public limited company with a primary listing on the London Stock Exchange (LSE) and secondary listings on Euronext Amsterdam and the New Yo ...

came to the result that the life expectancy of a

Fortune 500 The ''Fortune'' 500 is an annual list compiled and published by ''Fortune'' magazine that ranks 500 of the largest United States corporations by total revenue for their respective fiscal years. The list includes publicly held companies, along ...

company is below 50 years, because most companies are unable to adapt their organization to changes in their environment. * The continuous ''need'' for companies ''to explore and develop new business fields'', when their current business fields become unprofitable. For this reason companies need to develop specific abilities that allow them to identify new promising business fields and the ability to develop them. * The difficulty and therefore often the lack of ''taking decisions under uncertaint''y.

To overcome three major challenges

There are three major challenges that make it difficult for organizations to respond to external change: * A high ''rate of change'' that can be seen in (1) shortening of

product lifecycle In industry, Product Lifecycle Management (PLM) is the process of managing the entire lifecycle of a product from its inception through the engineering, design and manufacture, as well as the service and disposal of manufactured products. PL ...

s, (2) increased

technological change Technological change (TC) or technological development is the overall process of invention, innovation and diffusion of technology or processes.From ''The New Palgrave Dictionary otechnical change by S. Metcalfe. •biased and biased techn ...

, (3) increased speed of

innovation Innovation is the practical implementation of ideas that result in the introduction of new goods or services or improvement in offering goods or services. ISO TC 279 in the standard ISO 56000:2020 defines innovation as "a new or changed entity ...

, and (4) increased speed of the

diffusion of innovations Diffusion of innovations is a theory that seeks to explain how, why, and at what rate new ideas and technology spread. Everett Rogers, a professor of communication studies, popularized the theory in his book ''Diffusion of Innovations''; the book ...

* Large organizations' inherent "ignorance" that results from (1) a time frame that is too short for corporate strategic-planning cycles to produce a timely response, (2) corporate sensors that fail to detect changes in the periphery of the organizations, (3) an overflow of information that prevents top management to assess the potential impact, (4) the information does not reach the appropriate management level to decide on responses, and (5) information is systematically filtered by middle management that aims to protect their business unit. *''Inertia'' which is a result from: (1) the complexity of internal structures, (2) the complexity of external structures, such as global supply and value chains, (3) a lack of willingness to cannibalize current business fields, and extensive focus on current technologies that lead to

cognitive inertia Cognitive inertia is the tendency for a particular orientation in how an individual thinks about an issue, belief or strategy to resist change. In clinical and neuroscientific literature it is often defined as a lack of motivation to generate dist ...

that inhibits organizations to perceive emerging technological breakthroughs.

Need

In addition to the need to overcome the barriers to future orientation a need to build corporate foresight abilities might also come from: * a certain ''nature of the

corporate strategy In the field of management, strategic management involves the formulation and implementation of the major goals and initiatives taken by an organization's managers on behalf of stakeholders, based on consideration of resources and an assessment ...

'', for example aiming to be "aggressively growth oriented" * a high complexity of the environment * a particularly volatile environment * a hostile environment To operationalize the need for "peripheral vision", a concept closely linked to corporate foresight

George S. Day George S. Day is an educator and consultant in the fields of marketing, strategy and innovation management. He is the Geoffrey T. Boisi Professor Emeritus at the Wharton School of the University of Pennsylvania. He founded the Mack Institute for I ...

and Paul J. H. Schoemaker developed a questionnaire with 24 questions.

Implementation

The five practice dimensions

Based on case study research in 20 multinational companies, René Rohrbeck proposes a "

Maturity Model Maturity is a measurement of the ability of an organization for continuous improvement in a particular discipline (as defined in O-ISM3 ). The higher the maturity, the higher will be the chances that incidents or errors will lead to improvements ei ...

for the Future Orientation of a Firm". Its five dimensions are: * ''information usage'' describes the information which is collected * ''method sophistication'' describes methods used to interpret the information * ''people & networks'' describes characteristics of individual employees and networks used by the organization to acquire and disseminate information on change * ''organization'' describes how information is gathered, interpreted and used in the organization * ''culture'' describes the extent to which the

corporate culture Historically there have been differences among investigators regarding the definition of organizational culture. Edgar Schein, a leading researcher in this field, defined "organizational culture" as comprising a number of features, including a s ...

is supportive to the organizational future orientation The model is operationalised through 20 elements which have four maturity levels each. These maturity levels are defined and described qualitatively, i.e. by short descriptions that are either true or not true for a given organization.

The three process steps

Organisations need to build foresight through three core process steps, which build on specific practices: * ''Perceiving'': Practices that firm use to identify the factors that drive

environmental change Environmental change is a change or disturbance of the environment most often caused by human influences and natural ecological processes. Environmental changes include various factors, such as natural disasters, human interferences, or animal in ...

. Firm aim to identify (weak) signals ahead of competition to gain a lead-time advantage * ''Prospecting'': Practices through which firms engage in sensemaking and strategizing. Practices include working with analogies,

scenario analysis Scenario planning, scenario thinking, scenario analysis, scenario prediction and the scenario method all describe a strategic planning method that some organizations use to make flexible long-term plans. It is in large part an adaptation and gener ...

, systems-dynamics mapping, and

backcasting Backcasting is a planning method that starts with defining a desirable future and then works backwards to identify policies and programs that will connect that specified future to the present. The fundamentals of the method were outlined by John B. ...

* ''Probing'': Probing practices are exercise in dedicated accelerator units and in units/projects that receive the mandate to act. This may include

prototyping A prototype is an early sample, model, or release of a product built to test a concept or process. It is a term used in a variety of contexts, including semantics, design, electronics, and software programming. A prototype is generally used to ...

, R&D projects, consumer tests, internal venturing, strategic initiatives or external venturing. Probing practices aim at legitimizing and starting a new course of action and ultimately at gaining a

competitive advantage In business, a competitive advantage is an attribute that allows an organization to outperform its competitors. A competitive advantage may include access to natural resources, such as high-grade ores or a low-cost power source, highly skilled ...

. Corporate foresight can be expected to be a determinant of the quality of strategic conversation. It will also, in line with digitalisation of other organisational processes, be driven by online platforms that allow broadening the scope of the people who can get involved in defining new courses of action.

Innovation management

Through an empirical investigation Rohrbeck identified three roles that corporate foresight can play to enhance the

innovation management Innovation management is a combination of the management of innovation processes, and change management. It refers to product, business process, marketing and organizational innovation. Innovation management is the subject of ISO 56000 (formerly ...

of a firm: * In the ''Initiator role'' Corporate Foresight supports the identification of new customer needs and emerging technologies. In addition it might also support the monitoring of competitors. To identify emerging technologies methods such as

Technology Scouting Technology scouting is an element of technology management in which :(1) emerging technologies are identified, :(2) technology related information is channeled into an organization, and :(3) supports the acquisition of technologies. It is a sta ...

can be used. Its particular appeal is the use of expert networks, that can also be used to later source the technologies. * In the ''Strategist role'' Corporate Foresight supports the identification of emerging business fields and supports the internal renewal and re-positioning efforts of the firm. * In the ''Opponent role'' Corporate Foresight uses the insights from the environmental scanning to challenge ongoing R&D projects. The aim is to ensure that innovation initiatives are continuously benchmarked against emerging technologies and confronted with current customer needs. The study also showed that only a small number of firms have implemented the third role. In the majority of firms the aims of an innovation development project that have been defined are not challenged after the initial decision has been taken. This carries the risk that changing environmental conditions threaten the success of the innovation in development. Additionally, von der Gracht and Vennemann have developed a portfolio-approach, the so-called ‘Future-Fitness-Portfolio’, which enables companies to qualitatively compare amongst others and identify organizational improvement potential. The authors base their framework on both, corporate foresight and innovation management.

Foresight and external search

External search, understood as all organisational activities that involve the creation and recombination of knowledge from a wide range of external sources outside the boundaries of the firm, has recently been suggested as one of the key research frontiers for corporate foresight. Corporate foresight utilising external search for knowledge entails the usage of novel methods to monitor external development. Among these novel methods, Social Media Analytics for external search for knowledge and open foresight that enable firms to tune in to weak signals and scan the periphery has been shown to hold particular potential.

Benefits

Firms that have applied corporate foresight have received a number of benefits: * Identify changes ahead of competition * Trigger innovation initiatives * Challenge innovation projects to make them more successful * Overcoming dominant

mental model A mental model is an explanation of someone's thought process about how something works in the real world. It is a representation of the surrounding world, the relationships between its various parts and a person's intuitive perception about thei ...

s that stand in the way of necessary organisational response * Moderate strategic discussions * Breaking away from

path dependency Path dependence is a concept in economics and the social sciences, referring to processes where past events or decisions constrain later events or decisions. It can be used to refer to outcomes at a single point in time or to long-run equilibria ...

* Support the search, development, and acquisition of

strategic resource In economics, factors of production, resources, or inputs are what is used in the production process to produce output—that is, goods and services. The utilized amounts of the various inputs determine the quantity of output according to the relat ...

s On a higher level it has been documented that firms will be able to * Enhance their perception on the external environment * Trigger strategic organisational responses * Trigger new innovation initiatives * Contribute to organisational learning * Shaping the future (by influencing other players to act) More recently a longitudinal study, that tracked 83 companies over a period of 7 years, has found that firms that have the right maturity level of corporate foresight practices (high future preparedness) can expect an on average 33% higher

profitability In economics, profit is the difference between the revenue that an economic entity has received from its outputs and the total cost of its inputs. It is equal to total revenue minus total cost, including both explicit and implicit costs. It i ...

and a 200% higher

market capitalisation Market capitalization, sometimes referred to as market cap, is the total value of a publicly traded company's outstanding common shares owned by stockholders. Market capitalization is equal to the market price per common share multiplied by t ...

growth, when compared to the average.

Case studies

In recent years corporate foresight has become more professional and widespread. Documented examples of organizations applying corporate foresight practices include: * Automobile:

Audi Audi AG () is a German automotive manufacturer of luxury vehicles headquartered in Ingolstadt, Bavaria, Germany. As a subsidiary of its parent company, the Volkswagen Group, Audi produces vehicles in nine production facilities worldwide. Th ...

, Daimler, * Chemical:

BASF BASF Societas Europaea, SE () is a German multinational corporation, multinational chemical company and the List of largest chemical producers, largest chemical producer in the world. Its headquarters is located in Ludwigshafen, Germany. The ...

, * Consumer goods:

Pepsi Pepsi is a carbonated soft drink manufactured by PepsiCo. Originally created and developed in 1893 by Caleb Bradham and introduced as Brad's Drink, it was renamed as Pepsi-Cola in 1898, and then shortened to Pepsi in 1961. History Pepsi was ...

, * Engineering and Electronics:

General Electric General Electric Company (GE) is an American multinational conglomerate founded in 1892, and incorporated in New York state and headquartered in Boston. The company operated in sectors including healthcare, aviation, power, renewable energ ...

Siemens Siemens AG ( ) is a German multinational conglomerate corporation and the largest industrial manufacturing company in Europe headquartered in Munich with branch offices abroad. The principal divisions of the corporation are ''Industry'', '' ...

, * Financial service industry:

Deutsche Bank Deutsche Bank AG (), sometimes referred to simply as Deutsche, is a German multinational investment bank and financial services company headquartered in Frankfurt, Germany, and dual-listed on the Frankfurt Stock Exchange and the New York Sto ...

, * Information and communication technology industry:

Cisco Cisco Systems, Inc., commonly known as Cisco, is an American-based multinational digital communications technology conglomerate corporation headquartered in San Jose, California. Cisco develops, manufactures, and sells networking hardware, ...

Deutsche Telekom Deutsche Telekom AG (; short form often just Telekom, DTAG or DT; stylised as ·T·) is a German telecommunications company that is headquartered in Bonn and is the largest telecommunications provider in Europe by revenue. Deutsche Telekom was ...

, EIT Digital,

France Telecom Orange S.A. (), formerly France Télécom S.A. (stylized as france telecom) is a French multinational telecommunications corporation. It has 266 million customers worldwide and employs 89,000 people in France, and 59,000 elsewhere. In 2015, ...

, * Oil and gas industry:

Shell Shell may refer to: Architecture and design * Shell (structure), a thin structure ** Concrete shell, a thin shell of concrete, usually with no interior columns or exterior buttresses ** Thin-shell structure Science Biology * Seashell, a hard o ...

* Professional services:

KPMG KPMG International Limited (or simply KPMG) is a multinational professional services network, and one of the Big Four accounting organizations. Headquartered in Amstelveen, Netherlands, although incorporated in London, England, KPMG is a net ...

* Transport industry:

SNCF The Société nationale des chemins de fer français (; abbreviated as SNCF ; French for "National society of French railroads") is France's national state-owned railway company. Founded in 1938, it operates the country's national rail traffi ...

Such organizations typically use corporate foresight to support

strategic management In the field of management, strategic management involves the formulation and implementation of the major goals and initiatives taken by an organization's managers on behalf of stakeholders, based on consideration of Resource management, resour ...

, identify new business fieldsRohrbeck, R., S. Mahdjour, S. Knab, T. Frese (2009
Benchmarking Report - Strategic Foresight in Multinational Companies
Report of the European Corporate Foresight Group:

Berlin, Germany Berlin ( , ) is the capital and largest city of Germany by both area and population. Its 3.7 million inhabitants make it the European Union's most populous city, according to population within city limits. One of Germany's sixteen constituent ...

and increase their innovation capacity.

References

Scientific Journals

Technological Forecasting and Social Change ''Technological Forecasting and Social Change'' (formerly ''Technological Forecasting'') is a peer-reviewed academic journal published by Elsevier which discusses futures studies, technology assessment, and technological forecasting. Articles foc ...

Futures Futures may mean: Finance *Futures contract, a tradable financial derivatives contract *Futures exchange, a financial market where futures contracts are traded * ''Futures'' (magazine), an American finance magazine Music * ''Futures'' (album), a ...

Futures & Foresight Science ''Futures & Foresight Science'' is an academic journal published by Wiley. The journal publishes articles dedicated to advancing methods that aid anticipating the future. The journal was established in 2019 by Professor George Wright (Editor in ...

* Foresight *

Journal of Futures Studies The ''Journal of Futures Studies'' (JFS) is a quarterly peer-reviewed academic journal in the discipline of futures studies. It is published by Tamkang University Press on behalf of the Graduate Institute of Futures Studies at Tamkang University i ...

External links

Future Screening research project, a practical framework for advancing strategic corporate foresightBibliography on Corporate Foresight and Organizational Future OrientationThe Strategic Foresight and Innovation group on LinkedInAndy Hines dissertation, The Role of an Organizational Futurist in Integrating Foresight into Organizations
{{DEFAULTSORT:Corporate Foresight Strategic management Foresight (futures studies)