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Summary of Strategic & Responsible Foresight - All required literature - University of Twente - International Business Administration - CHANGEL module$4.86
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Summary of Strategic & Responsible Foresight - All required literature - University of Twente - International Business Administration - CHANGEL module
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Course
Strategic and Responsible Foresight
Institution
Universiteit Twente (UT)
Summary of all the required literature for Strategic & Responsible Foresight - University of Twente - International Business Administration - CHANGEL module.
The summary contains the following:
Van der Duin 2016 Introducton Foresight in organizations, p.1-8.
Vecchiato & Roveda 2010 Strategic Foresi...
Van der Duin 2016 Introducton Foresight in organizations, p.1-8.
1. Introduction
The future in an important playing field. This book is meant to familiarize the reader with a number of
different methods that can be used to look at the future, and the tools that can be employed in doing so.
Almost everybody is involved with the future. Many foresight professional agree with the statement that
the future does not exist, because each person imagines and interprets the future differently.
Incidentally, the claim that the future does not exist as an entity is incorrect. What that means is that the
future may not exist as a psychical entity, it does exist as a social construct. Even if the prediction of the
future is incorrect, it can still affect the actual future situation.
2. Approaches to the future
Different time preferences are reflected in three different approaches to the future: predictive,
explorative and normative. The predictive approach to the future leans heavily on historical data and
projects historical patterns onto the future. The explorative approach assumes that the future is not an
automatic continuation of the past and focuses more on what could happen in the future. The normative
approach to the future is dissatisfied with the current state of affairs and sees the future above all as a
possibility to fix things. The approaches are not separate entities, but are connected cyclically.
The cyclical loop can start in the past with, for instance, prediction about the future based on the
past(forward loop). On the basis of that, they often look at the past differently as well(backward loop).
But the cyclical loop can also start in the future. Based on a foresight study, people’s thoughts and
decisions in the present change(backward loop), after which it is possible that the past is seen in a
different light. The normative approach to the future above all related to the cyclical loop(backward and
forward) between the present and the future, whereby the proposed future leads to a variety of possible
roadmaps or transition trajectories that start in the present and envisage the realization of the proposed
future. The modern history of looking at the future shows a shift away from the predictive toward the
explorative and the normative.
The predictive and explorative approaches are complemented by the normative approach, which is not
based on what the future looks like or may look like, but what one wants the future to look like. What it
has in common with the explorative approach is that there is a broad variety of possible futures.
Whereas, in the case of an explorative approach, there can be many imaginable futures, in the case of
the normative approach, there are many imaginable futures that one wants to realize. The difference
between the two approaches is that the explorative approach has no value judgment about the quality
of positivity or negativity of the future vision, while the normative approach results in a predominantly
positive outcome. The normative yields a positive or desirable result, while that is not necessarily the
case with the predictive approach.
,An important difference between, on the one hand, the explorative and predictive approach and, on the
other hand, the normative approach, is that the first two approaches are usually future visions of the
environment of the subject, while the normative approach says something about the desired state of the
subject itself. This leads to another difference, namely with regard to the decision that is made on the
basis of the foresight study. In the explorative approach, different decisions or strategies are linked to
different future visions. In the predictive approach, it is very difficult to establish a link between the
future vision and a possible decision, because the predicted future is fixed and can no longer be
influenced. In the normative approach, there are various possible decisions or strategies, but they all
have to lead to the same future vision. The normative approaches matches with the singular future
vision of the predictive approach, and the various ways in which it can be realized matches with the
explorative approach.
3. Foresight methods
An approach to the future is no more than an approach unless it is worked out further. Between the
approach to the future and the eventual futures study, there are various methods of foresight. All
approaches are accompanied by a method.
This path does not have to be linear in nature. It is for example possible to decide in advance what type
of decision or action is needed. In fact, a futures study is needed to determine which approach to the
future to use. To determine which approach is valid requires a kind of pre-foresight or meta-foresight.
The more distant the future under examination is, the more sense it makes to explore the future. In the
longer term, it is better to include various possible futures. Seven foresight methods:
1.Scenarios.
2.Delphi method.
3.Trend analysis.
4.Technology forecasting: quantitative trend extrapolation.
5.Technology assessment.
6.Backcasting.
7.Roadmapping.
,One can’t argue that one method is better than another, because every method has a more or less
different objective. The criteria for the application of foresight methods vary on the basis of the type of
method, which means that, when selecting a method, it is important to keep in mind what the aim of the
futures study is. There is no one size fits all, but there is a contingency principle. The best method has to
be chosen depending on the situation. The term situation refers to the goal and application of the
futures study, the available data, the type of organization and sector, the specific questions that need to
be answered etc. As far as their popularity is concerned, the scenario method has the best score.
The Delphi method is often used to consult large groups of experts regarding future developments.
Roadmapping is often used by business, and in particular technological businesses, want to know how
they can realize a future technological application. Technology forecasting is used to make decisions
about new technologies. Technology assessment can be seen as a response to technology forecasting,
after it became clear that assessing potential social consequences of the development and
implementation of new technology is not entirely unimportant. Backcasting has become considerably
more popular in identifying sustainable goals in the future and how to reach them. Trend analysis has
always been popular for the reason that mapping future developments is always useful for organizations
that want to be ready for the future.
Vecchiato & Roveda 2010 Strategic Foresight in Corporate Organizations, section 1.2-3.1,
p.1527-1534.
1. Introduction
The external environment of the firm is a major source of uncertainty for managers in charge to detect
emerging opportunities and threats and to respond timely to them. There are three specific types of
uncertainty concerning drivers of change:
1. Uncertainty about their evolution (state uncertainty).
2. Uncertainty about their impact on the competitive position of the firm (effect uncertainty).
3. Uncertainty about the response viable to the firm (response uncertainty).
In order to cope with environmental uncertainty, many multinationals started to engage in future
studies. The term environmental scanning became widely used and a large set of future-oriented
techniques and methods have been developed and applied such as roadmaps, scenarios, Delphi,
relevance trees, cross-impact analysis, simulation modelling, system dynamics and game theory.
Foresight become used to encompass a wide range of approaches and activities which aim to help
managers to handle uncertainty. Future success depends as much on handling the effect of uncertainty
and the response uncertainty about drivers of change as it does on handling the state uncertainty, by
addressing the following key issues:
1. How to anticipate the impact of drivers of change on the industry structure and composition of the
firm.
2. How to draw the implications of drivers of change for strategy formulation.
3. How to cope with drivers of change.
4. How business managers should define the most appropriate responses for exploiting these drivers and
thus developing the new resources and organizational capabilities they require.
,2. Literature review
2.1 Environmental Uncertainty
In the literature research two strictly intertwined lines of research studies have been followed:
1. Conceptualization of environment and its different components (sectors): Distinction between the
general and task environment.
2. Regards the construct of environmental uncertainty: The concept is built on the assumption that it
arises from a lack of information about organizations, activities and events in the different sectors of the
business micro and macro-environment. Uncertainty consists in the inability of decision makers to
predict some events accurately.
Two environmental features in particular bring about the general level of uncertainty: (1) complexity and
(2) rate of change. Parallel with the stream on environmental uncertainty is the field of research that
concerns the role of managerial and organizational cognition in handling uncertainty. Managerial
cognition refers to the managerial beliefs and mental models that serve as a basis for strategic decision
makers for framing the analysis of changes in their external environment and searching for alternative
options in order to cope with these changes. The cornerstone is the bounded rationality of managers.
Managers develop mental models as simplified representations of the environment in order to give it
shape and meaning and to be able to retrieve, understand and process information about it. The key
problem is that while mental models may transform complex information about the environment into a
manageable one, at the same time they critically affect the manner in which decision makers perceive
important changes in their business environment.
2.2 Foresight Activities
In order to handle environmental uncertainty, a research stream of future studies was developed since
the 1960s. In particular, research on environmental scanning focused on where and how executives scan
their business environment.
Environmental scanning and future-oriented techniques (most common practices developed in business
context for helping managers anticipate the likely evolution of drivers of change and thus support long-
term thinking strategy) are the essential components of future studies. Strategic foresight activities in
corporate organizations can be classified according to three main criteria:
1. The major focus – field of investigation.
2. The scope – level of analysis.
3. Organizational approach – time horizon.
Future-oriented techniques may largely differ in terms of complexity and sophistication. So far literature
on strategic foresight focused on how to design methodological approaches and organizational process
for anticipating the likely evolution of drivers for change.
, 3. Handling the “effect” uncertainty of drivers of change
What managers need to know about drivers of change is ultimately the capability of these drivers to
affect:
1. The industry structure (i.e. Porter's Five Forces) and thus the sources which govern competition in the
industry.
2. The value chain, namely the activities through which the industry players create value to their
customers.
A driver of change is considered as relevant and disruptive as it is able to elevate new sources of
competition to the forefront. The most cognitive and natural attitude towards change is to conceive the
evolution of the industry structure as a linear extrapolation of the current situation. Such an attitude is
due to the rational bounds of managers. The real challenge of strategic foresight is not only to detect
drivers of change promptly, but to reshape the strategic beliefs of managers.
Discontinuous drivers of change require to figure out discontinuous business models for exploiting them
fully. Managers must give up their traditional strategic beliefs regarding the boundaries of their
organization and shift their strategic focus on the driver in order to redefine the objective of the
activities of the values chain, not just the way of performing them. They have to put the driver first. The
new configuration of the value chain may require the creation of a new activity that did not exist
previously. Such a cognitive assessment of the impact of a driver of change is defined as the anticipatory
approach to industry transformation. Not every driver is discontinuous though. In many cases a
sustaining approach naturally brings to the business model that best matches the driver. As such there
are two main approaches to industry evolution:
1. The sustaining approach: Extrapolating the value chain.
2. Anticipatory approach: Putting the driver first.
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