Foresight: The Organizational Alternative to Fight or Flight

It has been said that those who fail to plan, plan to fail. While I believe this statement to be trite and overused, I am also annoyed by how true it is. Today’s post provides two examples of companies who prove this idiom contains truth you should heed!

The Bad – Failing to Plan

The story of a Nevada power company exemplifies what occurs when we fail to plan. When the Mandalay Bay Resort & Casino completed installation of 26,000 new solar panels, they told their power provider (NV Energy) they were leaving the grid. NV Energy’s inability to foresee the impact of solar use (in the sunny desert!) led to them losing 7% of its revenue when Mandalay stopped using their services. And it gets even more interesting! This energy company took them to court and Mandalay ended up having to pay $87 million to NV Energy so their losses would not be passed on to existing NV Energy customers. “This is what happens when disruptive technology becomes popular: the monopolies fight back” (CBC).

The emergence of solar as a clean energy alternative is not new, especially in sunny desert regions! States have been legislating changes which require companies to use more clean energy for many years. However, many utilities have neglected to plan for these changes. As a result, this example reveals what occurs when we fail to plan.

The Good – Anticipatory Planning 

In contrast, UPS, known for their logistics solution, is branching into something unusual and new – 3D printing. While this may seem like a stretch, this decision is a result of intentional foresight work. Foresight is the ability to anticipate and respond to trends and key external forces which have the ability to disrupt the way we do business. Here is how UPS used foresight to respond to disruptive technologies in their environment:

‘Aside from its main package delivery service, UPS gets an undisclosed portion of its revenue from storing and shipping parts for manufacturers. If those customers were to switch to 3D printing their own parts, that business would face a drastic reduction. To counter that threat, UPS has chosen to get on board the 3D revolution, and is now looking to offer a service in which UPS will print out plastic parts – anything from nozzles to brackets to prototype soap dispensers or multi-faceted moving parts – around the world and deliver them’ (Freuters).

Foresight also explains why UPS is investing in companies that make drones and an upstart one-day delivery company (Frueters).

As a futurist and strategic foresight junkie my heart is warmed when I read stories about companies like UPS. In contrast, my blood begins to boil when I read examples about the electricity industry (because I pay for their ineptitude on my monthly bill). So even though the statement may be overused, failing to plan is indeed planning to fail.

If you don’t have a strategy, you’re part of someone else’s strategy. Alvin Toffler

In times of rapid change, a crisis of perception – the inability to see an emerging novel reality by being locked inside obsolete assumptions – often causes strategic failure, particularly in large, well-run companies. Pierre Wack


Head Shot

Jeff Suderman is a futurist, consultant, and professor who works in the field of organizational development. He partners with clients to improve culture, leadership, teamwork, organizational alignment, strategy and organizational future-readiness. He resides in Palm Desert, California. Twitter: @jlsuderman Email: jeff@jeffsuderman.com

Source: Reuters, CBC

Photo Credit: FreeImages.com/MalikBhai

Leading Change: Learning from the Laggards

The Kodak story reminds us that ongoing organizational success is earned and cannot be assumed. Once heralded as the global leaders in photography, their inability to foresee changes brought about by digital technology left them behind. In fact, they were so far entrenched in the old ways of doing things, that they even patented a method to turn digital photos into old-school negatives! As a result, their slow response to change forced them into bankruptcy in 2012.

We have heard many idioms about change;

Change is hard | Change is good | Don’t fight change | You need a change of scenery | Times change

The only thing that doesn’t change is change itself

However, no matter how much we know about change, it still seems to sneak up on us and bite us in the proverbial butt. This is currently occurring in the energy industry where our quest for renewable energy sources is leaving many traditional energy companies behind. These companies may not know it, but they are beginning to act in ways that reveal they are not prepared for this change.

In recent years, many Las Vegas hotels have invested heavily in solar power. This has allowed them to become energy self-reliant. However, the local utility company has been devastated by the loss of several major casino customers. As a result, the utility is requesting multi-million dollar exit fees from the casinos (McDonald). “It’s a strange case where new technology — designed to save money — ends up costing more because of the loss to the old technology it replaces” (McDonald).

Similarly, this past January, California utility regulators narrowly passed new rules that will increase costs for owners of rooftop solar systems for the same reasons (Penn). People who have installed solar are now paying an extra $10-$15 fee per month to cover the costs required to maintain their utility company’s non-solar transmission structure. Penn notes that “some states such as Nevada have rolled back rooftop solar benefits to a point that the solar industry intends to close operations in those locations”.

This is a complex issue with many pros and cons which I cannot adequately cover in this blog. However, these energy examples all point to the challenges of change.  McDonald summarizes it well;

“When the automobile came along, horse farms, blacksmiths and saddle makers were eventually replaced by garages, gas jockeys and mechanics. The printing press replaced hand printing, automation changed the way assembly plants operated. The list is long.

In every case, one profession — and along with it, many jobs — was lost. But at the same time, a new trade came along, demanding a new set of skills — such as robotics technicians or computer programmers — that kept people employed. In addition, many new industries that didn’t even exist before spun off from the new technology”.

The traditional energy industry is in the midst of one of these changes. The emergence of solar energy and personal energy grids (microgrids) are revealing an energy structure that has not kept up with changes in the energy industry. In fact, it makes me wonder why our energy companies have not been at the forefront of embracing and leading this innovative change.

As organizations (and individuals), the ability to foresee and adapt to change has become an issue of paramount importance in the information age. This is why I focus a lot of my work on both the art of leading change as well as the ability to anticipate it (strategic foresight). While it is easy to point our fingers at examples like the energy industry, our own organizations are no less vulnerable! So what are you doing to ensure that you don’t become the next Kodak?


Head ShotJeff Suderman is a futurist, professor, consultant and pracademic who works in the field of organizational development. He works with clients to improve leadership, teamwork, organizational alignment, strategy and organizational Future-Readiness (and he loves great customer service!). He resides in Palm Desert, California. Twitter: @jlsuderman. Email: jeff@jeffsuderman.com

References

McDonald, Bob (Mar. 11, 2016). Cashing in the energy chips in Las Vegas. CBC News online.

Penn, Ivan (Jan. 28, 2016). California solar owners face new fees, utilities say costs should be higher. LA Times online.

Photo Credits: http://www.aecom.com