LEAD FROM THE FUTURE - innosight.com€¦ · future—one that can potentially transform whole industries. But vision is only the “what,” not the “how.” Vision is made actionable

THE IDEA IN 5

LEAD FROM

THE FUTURE

Visionary business leaders, it is said, are almost always entrepreneurs who built their companies from scratch. Most, we have been led to believe, are people we can only admire and never hope to emulate.

That is not what we believe.

Developing and deploying an inspiring and actionable vision is a skill that can be learned. Beyond that, it can be driven into the cultures of even the most hidebound organizations, reigniting their entrepreneurial fires and infusing them with a renewed sense of purpose and direction.

We believe that any leader, at any level, in any organization, can become a practical visionary.

To stay ahead of the curve of change, you have to think from the future back.

So much of the management doctrine we live by was created more than a century ago to ensure efficiency and repeatability. Executives are trained to gather and parse quantitative data and base their decision-making on what it tells them. But such data is by definition from the past.

Thinking from the past and the present forward works well when your goal is to play and win the same game in your current markets, but it cannot keep you ahead of the curve of change.

To achieve and sustain breakthrough growth, you need to master a different kind of thinking, one that is more intuitive but no less rigorous. Future-back thinking, as we call it, gives you clarity into how your markets are evolving. It is what you need when you have to play and win a different game, with a different set of rules.

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The main point here, is that the CEO is de facto the Chief Innovation Officer in any company where innovation is a critical strategy to drive growth and value creation.”A.G. LAFLEY, TWO-TIME CEO OF PROCTER & GAMBLE

Innovation needs that spark, but it needs buy-in and it needs time...You need to build the culture and make the argument and tell the stories. You need to carve out the time to do it right.”ADMIRAL JAMES STAVRIDIS, RET., FORMER SUPREME COMMANDER, NATO

“Most incentive systems are backwards. They pay for last year’s successes. Yet investors invest for a company’s future performance.SCOTT COOK, CO-FOUNDER OF INTUIT

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The Perils of Present-Forward Thinking

The first railroad trains looked exactly like strings of stagecoaches. Similarly, the first cars looked very much like the horseless carriages that they were.

If their inventors didn’t fully anticipate their disruptive implications, the coach and carriage makers of their day enjoyed a false sense of security. Few of them could have imagined a future in which their core product had become as irrelevant as they would.

The same thing has happened in our own lifetimes. Newspapers were blindsided by the sudden obsolescence of the classified ad; book, department, and now grocery stores have been disrupted by online retailing; music and movies and traditional TV by digital streaming.

It wasn’t that the leaders of those incumbent industries didn’t have strategies and plans. The problem was that they extrapolated what they knew into an unknown future instead of envisioning how truly different their competitive environments would become.


To recognize developments that threaten your existing paradigm, you need to set your planning horizon much further out than most companies do. To leverage those developments to your full advantage, you need to think and lead from the future back.


The Power of a Long-Term Planning Horizon

In 2019, Innosight surveyed business leaders from a wide range of global industries. Fully 75 percent of them reported that they set their planning and forecasting horizons no longer than five years out. Only 10 percent planned for eight to ten years or more. But the benefits of a longer-term planning horizon are numerous. It:

Most of all, it allows you to develop a powerful vision of what your company can become—and a strategy to achieve it.

Silences the distracting noise of the here and now

Allows you to see how faint signals and emerging trends can become fault lines that fracture over time

To embrace beyond-the-core opportunities that will likely take five years or more to incubate and scale

To decide which of your current efforts must be stopped or slowed down


VISION vs. STRATEGY

Defines the ends or the destination

Choices made in the near term

Choices made about the longer-term

Defines a new game to play

Determines how to win the game

Inspires the organization Operationalizes the vision

Defines the means or the journey

Vision and Strategy are not the Same Thing

When we call a business leader a visionary, we mean that he or she has a vivid, systems-level understanding of their organization’s best possible future—one that can potentially transform whole industries. But vision is only the “what,” not the “how.” Vision is made actionable through strategy, which is the means to achieve it.


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Steve Jobs and the Digital Hub Strategy: A Future-Back Business Case

When Steve Jobs returned to Apple in 1997, it had scaled into an enterprise whose core product, the home computer, was beginning to commoditize. So, starting in 1999, Jobs imagined what Apple could become by 2010. Instead of simply being commodity tools, he realized, Apple computers could become the enabling hubs of the digital devices—still and movie cameras, music and DVD players, and more—that were just coming onto the market.

Then he brought that vision back into the present, developing software like iPhoto, iMovie, iTunes, and Garage Band that made those devices more powerful and easier to use. And then he upended the entire industry with the iPod, iPhone, and iPad, which put the hub into his customers’ pockets. By 2010, Apple was not only the most valuable technology company in the world.

“You can’t connect the dots looking forward,” Jobs told Stanford’s graduating class of 2005. “You can only connect them looking backwards.”

Visionary leaders like Jobs explore the topography of the possible and then, after envisioning how they might master it, walk that vision back to the present and strategically deploy it.


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THE LEARNING LOOPFuture-back thinking is refined through a process of iterative learning

Future-Back Leader

Future-back leaders are avid learners and eager collaborators. Above all, they are adaptable, willing to adjust their assumptions as they come into contact with reality.

This learning process is best enabled through “strategic dialogues”—structured conversations in which leaders work through their ideas as a team, diverging and ultimately converging on key questions and assumptions, developing a picture of their future environment that is detailed and tangible enough to grab hold of.


The Future-Back Process

The future-back process unfolds in three major phases:

1. Develop a vision – an impressionistic painting of your company’s best possible future.

2. Walk it back into the present, translating it into a clear strategy, with explicit benchmarks and goals, that you can begin today.

3. Prepare for and manage its implementation.

III. Program & Implement the Str

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THE FUTURE-BACK PROCESS


Janssen’s Future-Back Vision: A World Without Disease

But what happens when you have a vision that runs against the grain of a very large organization’s established ways of doing things—or more challenging still, that threatens its very identity?

In 2006, William N. Hait, the global head of R&D at Janssen, the pharmaceutical division of Johnson & Johnson, had a vision for a future where it was possible to prevent cancer, diabetes, Alzheimer’s and other devastating diseases from occurring, rather than simply developing drugs to treat them or address symptoms.

Everyone at Janssen could see the incredible promise of “early-stage disease interception.” But it didn’t fit into Janssen’s established business model and therefore carried new, unknown, and hard-to-quantify risks.

Hait realized that vision alone wasn’t enough—he needed a method to translate his vision into a strategy that others could see, understand embrace, and systematically bring to life. So, in 2016, he and his leadership team embarked on a future-back journey.

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Janssen’s A-ha Moment

As Hait and his team worked to refine their vision and launch the World Without Disease, they recognized that their new disease-interception paradigm would manifest at different rates for different disease areas. Ultimately, they agreed that they weren’t looking to create a new business model but to augment their old one with future-facing growth platforms.

Janssen’s highly successful core would continue to innovate on its current trajectory, developing and launching traditional drugs, while new efforts that accelerated the development of the World Without Disease initiative would be launched alongside it.

These new efforts would be focused on innovative drugs, but also on whatever else it took to realize the vision – from novel ways to screen for and identify people on the path to disease to consumer health products (like diapers that test babies’ urine for early signs of diabetes) to cutting-edge medical devices (like a robotic bronchoscope that can identify lung cancer in its earliest stages).

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Janssen’s Actionable Vision

To get Wall Street and your own stakeholders on your side, you need to tell them a hopeful story about your vision and your strategic plan. Here is some of the vision narrative that Hait and his team ended up writing:

Compare that with the typical vision statements that come out of HR-sponsored retreats: “We will be the number one preferred supplier of health products and services, dominating in the markets we choose to serve and recognized as the top place to work.” Which is more inspiring?

“We envision a world in which widespread disease is a historical artifact; where all people live healthier lives promoted by technological and medical advances; and where life science companies discover and deploy solutions that effectively prevent, intercept and cure disease. In line with our commitment to transformational medical innovation and our mission to change the trajectory of health for humanity, we will accelerate the development of healthcare solutions that eliminate disease.”

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From Storyteller to Engineer: Developing a Strategy

Not all leaders want to revolutionize their industry. Even if your goal is simply to sustain and maintain your current growth trajectory over time, it’s still important to grapple with the implications of the future.

Look out far enough, study current trends, and you will likely realize that your core cannot deliver the growth you need indefinitely. To develop a strategy to fill your anticipated growth gap (the difference between the revenues or profits you aspire to earn at your target end state and what you are likely to), you must switch from storyteller to engineer.

This is done by identifying Strategic Opportunity Areas. SOAs are fishing holes, each representing a market in which you can play and win, and that are filled with fish (potential business concepts) that can provide the beyond-the-core growth that you need to fill your growth gap.

SOAs should be broad enough to include a range of possibilities, but specific enough that they can frame one or more initiatives that you can begin today.

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Walk the Future Back

Once you have defined your future state portfolio, the next step is to walk it back to the present. To do this, you work backwards from your future state, setting milestones at roughly two-to three-year intervals. Now you are moving from SOAs to the actual business initiatives you can develop to exploit them.

Setting achievable near-term goals for your efforts -- for example, key talent hired, programs launched, proof of concept achieved, partnerships developed, M&A deals executed -- instills confidence, creates momentum, and ensures accountability.

Transformational strategies can take a long time before they show significant results; the curve often looks more like a hockey stick than a diagonal line. The walk back should account for this, allowing sufficient time for initiatives to incubate or explicitly defining the parameters for M&A to more quickly plug gaps.

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Before you can deploy a breakthrough strategy, it’s important to design and assemble a set of organizational and governance components that come together as an integrated system. These must:

• Formalize the roles and responsibilities of the senior leadership team as champions of both the overall strategy and the members of the innovation teams that are set up to carry it out.

• Set up an organizational model that protects breakthrough innovation teams from the countervailing influences of the core. It’s best to aim for minimally viable bureaucracy, though clear rules are needed.

• Manage initiatives with an explore, envision, and discover process so senior leaders and innovation teams can learn their way to success together.

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Systems level challenges demand systems level responses


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Anchors are moves—usually acquisitions or major partnerships—that in a single stroke make the strategy more real by bringing it heft and momentum.

They generate early revenue and bring an influx of talent and capabilities. The best anchors also create tangible value for the core business, generating goodwill and helping to keep skeptics at bay.

The World Without Disease’s anchor was the $3.4 billion acquisition of Auris, a Silicon Valley startup that had developed the first robotic bronchoscope.


4 Ingredients for an Effective Senior Leadership Team

Ultimately, the secret to lining up a leadership team that toggles back and forth between present-forward and future-back thinking is to ensure that you spend enough time together thinking in both ways. That’s why quarterly future-back reviews —one- to two-day retreats in which senior leaders convene to revisit their vision and strategy and review the progress their innovation teams are making – can be great opportunities for collective thinking and for keeping strategy efforts on track.

The understanding that successful enterprise leadership is as much about exploring and envisioning as executing and operating

A willingness on the part of its members to change their behavior, even if they’re not yet ready to change their minds

A willingness to “dance” with each other, guided by the structure of a shared vision for the enterprise as a whole

A strong, independent board and the willingness to collaborate with it

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The Future-Back Leadership Framework

Leaders need to toggle between present-forward and future-back thinking.

PRESENT-FORWARD FUTURE-BACK

Long term ExplorationEnvisioning & discovery

Leadership Focus:

OrganicCreativeIterative

Processes:

Learning milestonesAssumptions-driven

Decision Making:

Near termOperationsExecution

Leadership Focus:

OrderedAnalyticalLinear

Processes:

Financial milestonesFacts- and data-driven

Decision Making:

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The Future-Back Organization

In the summer of 2019, Jack Dorsey, the founder of Twitter and Square, spoke at Innosight’s annual CEO Summit about his vision of a sustainable organization.

“My job is threefold: Number one, making sure that we have an amazing team dynamic.

Job number two is that decisions are being made in the context of who we serve, in the context of our customers, of technological, social and cultural trends, and of our competition.

And the third job is just raising the bar on what we thought was possible. I want to build a company like Disney, that has survived the death of its founder and continues to carry on the same mindsets. I want a decision-making framework, and a product-planning framework that removes single points of failure.”

At the end of the day, future-back thinking is a recipe for sustainability.

I don’t want to build a company that’s dependent upon any one person, including me.”

JACK DORSEY, FOUNDER OF TWITTER


Beyond Business

Most beyond-business organizations have deep and inspiring missions, but, just as in the commercial sector, their institutional structures and processes and their leaders’ short-sighted habits of thought can stand in their own way. The government is prone to partisan gridlock, the military gets bogged down in bureaucracy. Too many religious institutions and charities fall out of touch with the communities that they are meant to serve.

The discipline of future-back thinking compels leaders to ask hard questions about both their future and their present—and reminds them of their ultimate purpose. As Peter Drucker wrote,

“Sloughing off yesterday is particularly important these days for the non-business public service institution…. success always means organizing for the abandonment of what has already been achieved.”

Future-back thinking applies to individuals too, who must pay heed to both their logic and their intuitions, constantly challenging themselves with such questions as “What do I truly want?” and

“What do I truly value?”


At its most basic level, stewardship is acting upon the understanding that leadership is a temporary role which is outlasted by the lifespan of an organization.

BEKELE GELETA, FORMER DIRECTOR GENERAL OF THE RED CROSS

Be a Steward

When all is said and done, Lead from the Future is a book about time – about how you orient yourself and your organization to the past, present, and future.

Without vision, there is only the push of the short term and no pull of the future. With vision, you can not only anticipate the future but help to create it. We hope this book will reignite a passion for learning and discovery among the leaders of organizations of all kinds. We have a higher hope too, which is that in thinking hard about what their organizations could be, leaders will also converge on an idea of what they should be.


ABOUT THE AUTHORSMark W. Johnson co-founded Innosight with Harvard Business School professor Clayton M. Christensen in 2000. The author of Reinvent Your Business Model: How to Seize the White Space for Transformative Growth (2018) and a coauthor of Dual Transformation: How to Reposition Today’s Business While Creating

the Future (2017), he received his MBA from Harvard Business School, a master’s degree in civil engineering and engineering mechanics from Columbia University, and a bachelor’s degree in aerospace engineering from the US Naval Academy.

Josh Suskewicz is a partner at Innosight, where he leads its Life Sciences and Medtech practice. A frequent contributor to the Harvard Business Review, Forbes, and other publications, he holds an honors degree in English literature from Harvard College.

ABOUT INNOSIGHTInnosight is a strategy and innovation consulting firm that helps organizations navigate disruptive change and manage strategic transformation. Now a member of the Huron Consulting Group, we work with leaders to create new growth strategies, accelerate critical innovation initiatives, and build innovation capabilities. Discover more about us at www.innosight.com.

To learn how we help companies develop future-back strategies and capabilities, get in touch with us at [email protected].

For additional insight and materials, visit www.futurebackleadership.com.

Lead from the Future is published by Harvard Business Review Press and is available globally in book and ebook form.

www.innosight.com

© 2018 Huron Consulting Group Inc. and affiliates. All rights reserved.

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LEAD FROM THE FUTURE - innosight.com€¦ · future—one that can potentially transform whole industries. But vision is only the “what,” not the “how.” Vision is made actionable