Leaning Forward: orientation towards the future
As approximately 80% of firm value is dependent upon future earnings expectations, to maximize value creation the leadership team should orientate the strategy of the firm for the future and invest to develop the capabilities required to win as the future unfolds. From the research, the evidence is clear, future orientated leadership teams that invest in building the Dynamic Capacity of their firms achieve competitively superior results.
Not all leadership teams seek to build the Dynamic Capacity of their firms. Whereas individual leaders may have reservations about the future relevance of existing strategies, individual and group KPI and group interactions tend to reinforce adherence to the existing ‘dominant logic’ that has guided previous strategies: After-all why change what has worked before especially when there is the risk of failure and the future is as yet unknown?
Successfully achieving Dynamic Advantage (i.e. competitively superior performance over time in contexts that are evolving) requires more than the realization that projecting forward past strategies is insufficient. The leadership needs the motivation to identify the new balance they wish to achieve between projecting from the past and embracing the future, i.e. the extent to which the firm should be forward leaning. They then need the commitment to nurture the development of the mechanisms that underpin the Dynamic Capacity of the firm and to leverage this capacity to guide investment in capabilities and repositioning the firm for winning in the unfolding future.
The leadership team must set a balance between leaning forwards into the unfolding future and achieving results today. The results today are essential as they provide the 'fuel' to reach tomorrow as well as to maintain stakeholder support.
As approximately 80% of firm value is dependent upon future earnings expectations, to maximize value creation the leadership team should orientate the strategy of the firm for the future and invest to develop the capabilities required to win as the future unfolds. From the research, the evidence is clear, future orientated leadership teams that invest in building the Dynamic Capacity of their firms achieve competitively superior results.
Not all leadership teams seek to build the Dynamic Capacity of their firms. Whereas individual leaders may have reservations about the future relevance of existing strategies, individual and group KPI and group interactions tend to reinforce adherence to the existing ‘dominant logic’ that has guided previous strategies: After-all why change what has worked before especially when there is the risk of failure and the future is as yet unknown?
Successfully achieving Dynamic Advantage (i.e. competitively superior performance over time in contexts that are evolving) requires more than the realization that projecting forward past strategies is insufficient. The leadership needs the motivation to identify the new balance they wish to achieve between projecting from the past and embracing the future, i.e. the extent to which the firm should be forward leaning. They then need the commitment to nurture the development of the mechanisms that underpin the Dynamic Capacity of the firm and to leverage this capacity to guide investment in capabilities and repositioning the firm for winning in the unfolding future.
The leadership team must set a balance between leaning forwards into the unfolding future and achieving results today. The results today are essential as they provide the 'fuel' to reach tomorrow as well as to maintain stakeholder support.
Purpose Driven Organization
The most important influence for the leaders to adopt a forward-leaning strategy is the strength of the sense of Purpose that they share. In pursuit of the shared Purpose they are energized and able to navigate through short-term disruptions and uncertainties orientating towards future horizons and objectives.
Leaders at firms with higher Dynamic Capacity tend to consider longer-term measures as indicators of their firms performance, whilst recognizing the need to maintain short term KPI.
The most important influence for the leaders to adopt a forward-leaning strategy is the strength of the sense of Purpose that they share. In pursuit of the shared Purpose they are energized and able to navigate through short-term disruptions and uncertainties orientating towards future horizons and objectives.
- For a global agrochemicals company, the decision to be more future-orientated emerged from its adopted purpose to help meet the global challenge of increasing arable land productivity such that a growing world population is able to feed itself even as available farm land decreases. This sense of purpose empowers them to expand the range of services that they provide to farmers and to establish partnerships with companies in other industries that also support agriculture (e.g. irrigation, machinery, data providers).
- A media conglomerate noted, “To have a single purpose (focused on the consumer experience) and consistently execute that, I think, has probably been the biggest contribution to why our share price has gone up because it has been a consistent focus regardless of some of the distractions in the market and economy.”
Leaders at firms with higher Dynamic Capacity tend to consider longer-term measures as indicators of their firms performance, whilst recognizing the need to maintain short term KPI.
- Quipped one executive; “We need to meet the results that the analysts expect today, otherwise I won’t be around to steer the company tomorrow, but if we were really only focused on quarterly results, our employment would go up plus or minus 25 thousand every quarter.”
- An executive in financial services said, “When I stop and think about us performing against competitors I think in terms of things like market share, customer satisfaction surveys etc. There are all kinds of analysts looking at us… gathering information and telling us what they found out. That's wonderfully easy to do that. But when I think about results, I consider the multi year trend of our performance in the market and competitor measures”