Knowledge Center: Article
Anticipate: Proactive vs. reactive organizations4/11/2017
Reactive organizations are prevalent in today’s economy. These organizations are defined by crisis management efforts and focused on protecting existing markets. By contrast, proactive organizations see disruptive forces as unique opportunities to gain long-term advantage. By developing a shared view of the future, proactive organizations shape the future, defining new ways of capturing value.
How can your organization be more proactive and better anticipate the future? The following five strategies can help:
1. Explore multiple futures and new business models. In 1992, Book Stacks Unlimited became the first online bookstore—two years before Amazon. While Book Stacks focused almost exclusively on variety, Amazon offered an easy-to-search, easy-to-browse format that saved customers money and time. In addition, Amazon bet that the future of the Internet would be personalization. Its many user experience innovations—such as peer review and dynamic customization—solidified its market leadership position.
2. Stay vigilant about external trends and uncertainties. Following the steady growth of the 1950s and 1960s, it was hard to believe that oil prices could rise rapidly. However, for a small team within Shell, an energy crisis seemed inevitable. It realized that OPEC might pursue a political rather than an economic agenda if war broke out with Israel. The team used a focused set of scenarios to explain to Shell’s leaders how the situation would evolve and convinced them of the imminent danger. As a result, Shell was ready when oil prices shot up again in 1979 due to the Iran–Iraq war.
3. Tap into a wide network of experts, including customers. By 1992, Corning Incorporated, the inventor of Pyrex and Corningware, found itself in dire economic straits following untimely investments in fiber optics. In order to deliver more targeted products, the company collaborated extensively with key clients to solve their toughest problems. This led to transformational products such as Gorilla Glass (which is used in many of today’s smartphones), photovoltaic glass for solar panels, and Synthemax surfaces to support the growth of stem cells. Today, Corning Incorporated is the world’s leading maker of specialty glass and ceramics. By scanning wider and fully tapping its deep and wide external networks, Corning won the long game.
4. Anticipate how the competitive game might change. Rising levels of obesity in the United States fueled interest in the noncarbonated drinks business in the late 1990s. PepsiCo and Coca-Cola saw the opportunity, but both companies lacked the ability to fully capitalize on their scale and potential for innovation and to enter the new drinks category on their own. They instead focused on commercializing innovations developed by others: PepsiCo purchased Quaker Oats, which at the time owned the much-coveted Gatorade sports drink brand, and Coca-Cola bought Glacéau, the maker of Vitaminwater. While PepsiCo and Coca-Cola lead the noncarbonated beverage market today, their relatively slow entry into the new segment means that several nontraditional players still pose a competitive threat.
5. Adapt to the evolving needs of your customers. A decade ago, Danish toymaker LEGO was on the brink of financial collapse. Leaders at LEGO realized that in order to remain competitive, they needed to bridge the physical and virtual worlds to accommodate the long-term trend of children spending more time on devices such as smartphones and tablets. As a result, the toymaker introduced products like the LEGO Fusion sets, which allowed children to build two-dimensional models of castles or racing cars and then use an app to capture the model and import it into a 3D digital world. In addition, its film The LEGO Movie was accompanied by a “Build with Chrome” website in partnership with Google, which enabled users to create models using digital bricks. LEGO’s willingness to adapt to tech-savvy customers has made it the most profitable company in its sector today.
The fortunes of Amazon, Shell, Corning, Coca-Cola, and LEGO illustrate the importance of timely anticipation—as well as not being held hostage by past success or failure. Winners and losers in business are increasingly defined by their ability to make sense of the changing dynamics in the world around them. What matters most is not the ability to adapt quickly to what the present demands, but to shape what is required for the future.
About the author
Camelia Ram is an alumna of Heidrick & Struggles’ London office.