Failure to forward plan and assess future risks is damaging business

Businesses must develop a clearer understanding of future risks and opportunities to succeed in both the recession and post-recession economy, according to one of the key findings in a major ‘Forward Thinking’ research report released by Barclays Commercial Bank and the Institute of Directors (IoD).

The report, the first of its kind, examines how businesses in the UK understand and plan for the future. It was prepared after surveying 600 business owners and senior managers about their company’s ability to understand the future external environment in which they will operate.

According to the research 25% of businesses are not presently analysing the furture external environment, the equivalent of 500,000 enterprises.

The Forward Thinking Report reveals that some 26% of business directors have lost potential revenue and profit because they failed to analyse future operating environments.

Of the 75% of companies that claimed to perform forward planning and analysis, just 55% felt they did it well. The remaining 45% believed they carried out future analysis poorly or just adequately.

FORWARD THINKING CHECKLIST

1. Take time to think about whether or not your organisation really does examine the future external environment as well as it could.

2. Look back; see if you can identify changes in the external environment that have had significant impact on your organisation. How would you have acted differently if you’d anticipated these changes?

3. Discuss your findings from (1) and (2) with senior management. Expect negativity from colleagues who assume forward thinking to be too difficult. Encourage them to identify potential opportunities lost in the past.

4. Identify the key barriers to forward thinking in your organisation – cost, in-house skills, corporate culture etc.

5. Decide how you can overcome these barriers – commit resources, cooperate with other organisations etc.

6. Consider teaming up with trade associations or group together with other forward thinking enterprises in ‘Forward Thinking Clusters’, hosting events or seminars to discuss the future external environment and its impact on your specific sector. Talking to your peers may suggest solutions or resources that you otherwise would not have considered.

7. Seek partnerships with others, from banks and industry organisations to conferences and think tanks in order to develop forward thinking.

8. Provide incentives for staff and customers to encourage the development of actionable ideas based on their analyses of the future external environment.

9. Adopt on-line tools such as forums for staff and customers to easily contribute to a debate on the future environment and its potential impact. These tools may be internal or external – available to the wider public at large.

10. For SMEs with limited resources, focus on how to exploit freely available material like internet sources. Analyse US websites covering your sector. Economies of scale in the US mean that many sectors have trade bodies and analysis unavailable in the UK. Speak to your bank about obtaining sector reports they produce.

11. Identify academics with expertise in different areas of forward thinking, particularly for those that will have the greatest impact on your market. Consider offering them non-executive directorships, and look to their work for inspiration.

12. Make sure somebody at board level has ‘ownership’ of forward thinking. Within the executive, delegate a Head of Forward Thinking even if this is only part of their role.

13. Review the process by which forward thinking is absorbed into the creation of a corporate strategy. Check that forward thinking is effectively integrated within strategy.

14. Explore the various forward thinking tools (scenario planning, economic forecasts etc) you wish to use. Question what each provides and then prioritise the most important for early adoption within your strategy.

15. Create a climate where alternative viewpoints challenging received wisdom are encouraged. Make sure that the views of senior management don’t smother ideas from elsewhere in the organisation.

The Forward Thinking report is available from www.business.barclays.co.uk/bb/forwardthinking