Right now, the pros and cons of quarterly financial reporting are being debated.
And US-based companies are positioning themselves for a possible change in the regulatory landscape.
The So What
Irrespective of regulatory requirements, it’s important for companies to embed a culture of long-term and stretch thinking, according to Alan Iny, global lead for creativity and scenarios at BCG and a fellow at the BCG Henderson Institute.
This is often about culture, discipline, and mindset rather than regulation.
“It is possible for an organization to have quarterly, even monthly, reports and still be super expansive and creative. Equally, it’s possible for an organization to have only biannual reporting and still be very short-term focused, tackling only the urgent rather than the important,” Iny says.
Setting aside time to think about different stretch possibilities for the medium and long term is essential to strategic preparation for any business or organization.
And scenario planning and trend analysis are tools in the strategic foresight toolkit that can help organizations become better prepared for whatever otherwise unexpected events may occur.
A cyberattack, for example, will always be sudden and require immediate attention. But having planned for this scenario in advance means that some practical and immediate aspects can be acted on more quickly. For example, firms can tackle questions such as:
- Who will be at the table?
- How to communicate with the media?
- What is the best way to deal with a ransom demand?
Having thought through these options in advance frees up the bandwidth to consider the long-term implications.
Using strategic foresight tools in this way can also help prepare for other shocks—such as the COVID-19 pandemic, geopolitical, or technological shifts—that cannot be precisely predicted. It can also provide space to think about megatrends, game how competitors and regulators are responding to events, and challenge assumptions.
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Now What
“People need nudging to think more regularly and systematically about the medium and long term: it rarely happens by chance,” says Iny.
This may require forcing time on a CEO’s calendar, on the management agenda, or at board meetings. And that logic needs to be cascaded down through an organization, with each business unit, geographical unit, and team actively encouraged to think about the long term.
Allow time for strategic foresight. The goal should be to block out the equivalent of one to two days per month for broader reflection. Step away from daily tasks and use this time to question assumptions, imagine different future paths, and look for new opportunities with a fresh perspective.
Encourage prospective thinking as well as predictive thinking. This can be done by asking open questions such as “what if this happened? And if it did, why? And how could the world get to this point?” This opens up discussions and contingency planning and empowers strategic thinking beyond bar charts and basic analysis.
See risk as an opportunity. Uncertainty can be an opportunity as well as a challenge. The obvious response to risk is to minimize, mitigate, and avoid. But many businesses are operating in an environment where change is constant and embracing this can be a major source of advantage for those able to move quickly. Having practised the discipline of long-term thinking, and imagined what was once the unimaginable, will help businesses embrace those risks and take decisions more easily.
