As we navigate the turbulent seas of change, the imperative for business leaders is clear – embrace future-sensing. The convergence of structural and cyclical changes creates both challenges and opportunities, and those who master the art of future sensing will not only weather the storm but emerge as leaders in the reshaped business landscape of the coming decade and beyond.
In an era marked by profound disruptions, it is only natural business leaders find themselves sailing through turbulent seas of uncertainty. From the lingering effects of COVID-19 to political polarisation, the rise of artificial intelligence and the spectre of recession, the traditional economic indicators that once guided decision-making seem to have lost their predictive power.
However, history has shown that such periods of upheaval – and the confluence of such structural and cyclical changes – can pave the way for remarkable business success over coming decades.
Shifting Forces: Structural and Cyclical Changes
Our contemporary landscape is influenced by a dynamic interplay of structural and cyclical changes, with technology leading the charge. The exponential growth in generative AI surpasses even the longstanding rule of Moore’s Law for microprocessors. Simultaneously, the world grapples with the consequences of carbon buildup and climate stress, as the demands of transitioning away from carbon heighten market volatility and global tensions.
Financial markets, too, stand at a crossroads as debt burdens reach historically unsustainable levels. The combination of low interest rates and inflated asset bubbles, fuelled by a surge in global financial capital over the past three decades, faces a reversal in the current environment of higher inflation and real interest rates. This collision of forces sets the stage for several major trends that will redefine the business landscape, including artificial intelligence, the dual challenge of decarbonisation and energy provision, post-globalisation, and rehumanising work.
These trends are not isolated but interconnected, creating a complex web of challenges and opportunities. Capital rationalisation may intensify in a post-globalised world with fragmented capital markets. As AI, energy, and trade regulations vary among countries, and consumer segments evolve independently, the business world is hurtling toward a multispeed reality. Each trend will unfold differently across industries and markets, demanding adaptive strategies and a nuanced understanding of the diverse forces at play.
Future Sensing against the Storm
In the face of this evolving landscape, business leaders must adopt a proactive approach to navigate the storm ahead. Future-sensing emerges as a critical capability, demanding an earlier and clearer view of the future. In a world characterised by greater macroeconomic volatility and shorter, less synchronised business cycles, companies must focus on monitoring signals such as patent filings, investment flows, and job creation. Analysing more than 200 trends, patterns emerge – gradual progression, catalysed growth, and viral adoption. Tracking these signals allows companies to prepare for extreme scenarios, develop strategic options, and make informed decisions amid uncertainty.
Large energy companies, for example, tasked with making multibillion-dollar bets over decades, have excelled in long-range planning. Divergent paths taken by European and U.S. oil and gas giants in response to the energy transition showcase the importance of strategic foresight. The multi-local approach, exemplified by companies like Uber and Airbnb, provides tailored leadership and regulatory engagement in different regions, adapting to local conditions and political landscapes. These underscore the effectiveness of future sensing in preparing for diverse and evolving scenarios. In navigating the storm, business leaders must adhere to three imperatives:
- An Earlier, Clearer View of the Future:
- Emphasis on “future sensing” in a volatile environment.
- Tracking signals to anticipate trends and scenarios.
- Planning for extreme scenarios and developing strategic options.
- Adjusting to Government Intervention:
- Closer alignment with government decisions, especially in the home market.
- Observing increased demands on businesses around economic issues.
- Fine-tuning activities to local conditions and political landscapes.
- Managing Supply-Demand Mismatches for Capital:
- Balancing financial and human capital in a changing landscape.
- Securing the right forms of capital at the right cost amid rising interest rates.
- Diversifying funding sources and exploring creative balance sheet options.
- Addressing the growing supply-demand mismatch for human capital through reskilling and talent development.
By developing the right capabilities to anticipate and adapt to emerging trends, companies can position themselves as agile navigators in an uncertain world. And that, in essence, is what future-sensing is all about.