Chapter 2
THINKING FROM THE FUTURE BACK
You can’t connect the dots looking forward.
You can only connect them looking backwards.
—Steve Jobs
Apple’s digital hub • A clean break from the past and present • The essence of future-back thinking • Thomas Edison’s systemic future-back approach • Aetna and “the theory of the business” • Vision vs. strategy • Know-it-alls and learn-it-alls • Attributes of future-back leaders • The learning loop: explore, envision, and discover • Strategic dialogues
As an example of what future-back thinking makes possible, we want to revisit the well-known story of Apple’s transformation from a niche computer company to the consumer electronics behemoth we know today, driven by its digital hub strategy.
Steve Jobs’s incredible leadership abilities—the fabled “reality distortion field” he wielded to help others see what he did and accomplish what they thought was impossible—has been the subject of countless articles, books, and even several big-budget Hollywood movies. Virtually all of them focused on the force of Jobs’s outsized personality rather than on the way he systematically articulated and strategically deployed his vision of a radically transformed Apple. No other business case in recent years better illustrates the power of envisioning the future and walking it back to the present.
Jobs, of course, cofounded Apple with Steve Wozniak in 1976 and left the company under a cloud in 1985. When he returned to it in 1997, it had scaled into an enterprise whose core product, the home computer, was beginning to commoditize. The iMac that Jobs helped develop and launch after he returned was a huge success, but it was still a personal computer that was competing at the high end of a market in which prices were rapidly falling. So, starting in 1999, Jobs began to look forward to 2010, imagining the role that the microprocessor and the personal computer could play in that world and how Apple might prosper in such an environment. In 2000, at an offsite meeting with his top one hundred lieutenants, he further expanded his thinking.
Instead of simply being commodity tools for making spreadsheets, word processing, surfing the internet, and exchanging emails, Apple computers could become the enabling hubs of the whole array of digital devices just coming onto the market—still and movie cameras, music players, DVD players, gaming consoles, ebook readers, and more. The major constraint on the usability of those early devices was their limited power and capacity. They were also jammed with clunky software, making them user-unfriendly. If most of their programming resided on Apple computers instead, they would be easier to operate and could do much more. This could multiply their value by as much as a factor of ten, Jobs said, and ensure that Apple and its computers continued to be commercially relevant.
On the basis of those insights, Jobs announced Apple’s new strategy to the world. What he didn’t share yet was his bigger and bolder idea—that Apple could be making all those consumer devices itself. Apple didn’t have to be just a computer company—it could become a music company, a camera company, a lifestyle company, and even a bricks-and-mortar retailer. Beginning in 2000, Apple began to quietly buy new technologies, set up new and independent teams, and systematically build toward this vision. It had milestone-driven plans for when new products would come online and how they’d build on one another. This vision encompassed Apple’s ongoing core business as a computer maker and the digital hub innovation (an adjacent new growth business). It included a plethora of consumer electronics devices Apple ultimately created that transformed whole industries (a set of beyond-the-core moves into its unexplored and underexploited markets, or white spaces).
Wrapping his arms around all those possibilities, Jobs brought them back into the present, one by one. First came the software to power the hub: iPhoto, iMovie, GarageBand, iTunes, and more. Then, in 2001, after a series of strategic acquisitions and an intensive internal development process, Apple debuted the paradigm-changing piece of hardware that would render music CDs and the stores that sold them obsolete. The iPod wasn’t the first MP3 player to hit the market, but it held a lot of songs (the tagline of its early ads was “1,000 songs in your pocket”). When the iTunes store opened its virtual doors in 2003, it became by far the easiest MP3 player to fill and use.
Soon Apple was licensing songs from record companies at such a clip that it surpassed them, becoming the largest vendor of recorded music in the world. Now Apple wasn’t just selling the digital hub but one of its spokes, along with the content that went into it. More than a breakthrough product, the iPod was a breakthrough business model—a reverse variation on King Gillette’s legendary razor handle and blade model, in which songs were sold cheaply to induce customers to buy the much more expensive iPod.
With the advent of the iPhone in 2007, Apple put the rest of the wheel into its customers’ pockets. The iPhone was not just a mobile phone, a camera, a PDA, a computer, a music player, a gaming console, and an ebook player in one but yet another breakthrough business model, this one based on the sale of proprietary and third-party apps as well as the phone itself. By the time the iPad was released in 2010, Apple was not only the most valuable technology company in the world; it was on its way to becoming the most valuable company of any kind.
Based on their vision of a different future for home computers, Jobs and his team formulated a strategy to make it a reality and executed it with relentless focus, launching industry-transforming innovation after industry-transforming innovation, growing the value of Apple’s market cap from $4.8 billion to $312.6 billion over ten years, an astounding 6,413 percent. And they did it during a decade that began with the bursting of the dot.com bubble and later experienced the most devastating economic crisis in nearly a century.
“You can’t connect the dots looking forward,” Jobs told Stanford’s graduating class of 2005. “You can only connect them looking backwards. So, you have to trust that the dots will somehow connect in your future. You have to trust in something—your gut, destiny, life, karma, whatever.”1 It’s a memorable quote, but we don’t believe that Jobs and Apple got where they did via fate or “whatever.” Whether they do it consciously, following a set of deliberate processes, or instinctively, visionary leaders like Jobs explore the topography of the possible and then, after envisioning how they might master it, walk that vision back to the present and strategically deploy it.
As spectacularly as Jobs’s strategy was succeeding, by as early as 2008 he was restlessly looking forward again toward the day when content and data and programming would reside on remote servers instead of in the hard drives of individual computers. In 2010, he laid out his new vision of the future and Apple’s place in it for his biographer Walter Isaacson:
We need to be the company that manages your relationship with the cloud—streams your music and videos from the cloud, stores your pictures and information, and maybe even your medical data. Apple was the first to have the insight about your computer becoming a digital hub … and it’s worked brilliantly. But over the next few years, the hub is going to move from the computer into the cloud. So, it’s the same digital hub strategy, but the hub’s in a different place.
“It’s important that we make this transition,” he added, “because of what Clayton Christensen calls ‘the innovator’s dilemma,’ where people who invent something are usually the last ones to see past it, and we certainly don’t want to be left behind.”2
Jobs died just a year later, and though Apple programs and devices are now thoroughly integrated with the cloud, his second strategy proved less transformative than the first, because Apple’s competitors were already going down the same road. Rather than seizing a huge competitive advantage for itself, migrating into the cloud simply kept Apple in the game.
Though the iWatch was developed and launched under Jobs’s successor Tim Cook, Cook has mostly defaulted to the present-forward approach of big incumbents, cautiously rolling out “new and improved models” of the iPhone, the Mac, and Apple’s other flagship products on a predictable schedule. Some of those improvements (like eliminating the conventional headphone jack from the iPhone 7) may test the limits of customer loyalty, although its brand seems bulletproof for now. Still, as sales of the iPhone plateau internationally, Apple’s growth rate has inevitably slowed. That said, Apple’s ongoing transition toward services and subscriptions and the $15 billion per year it invests in R&D could slow or even reverse that decline. Apple reportedly has a number of beyond-the-core moonshots in its pipeline, among them an augmented reality headset and a self-driving car. It is likely to need them.
The Essence of Future-back Thinking
Future-back thinkers like Steve Jobs make a clean break from the past and present. Their views of the future are so vivid they are almost tactile and so systemic they interpenetrate their views of the present, determining many of their most important decisions.
Present-forward thinking is high in knowledge and driven by known rules, facts, and data; future-back thinking is low in initial knowledge and high in assumptions—its aim is to discover what could be true.
In that respect, it has something in common with the “design thinking” that IDEO’s Tim Brown and the business thinker Roger Martin have described.3 It cannot predict the future, but it can recognize patterns and trends and build on them, fleshing them out with informed imagination to create a plausible picture of how the future might be shaped.
Since present-forward thinkers grapple with what already exists, the logical processes they employ are deductive and inductive, based on known rules as they are applied to or generalized from complete observations. Future-back thinkers, in contrast, employ problem-solving methods that are less structured as they deal with a combination of what is known, what is unknown, and what is imagined or envisioned. To develop their mental models, they use both traditional logic and abductive reasoning, a term coined by the American philosopher Charles Sanders Peirce to describe the thought processes that go into the generation of hypotheses from incomplete observations.
Future-back Thinking Is Systemic
When entrepreneurs and system builders like Cornelius Vanderbilt and Henry Ford looked at the early trains and cars that we described in the last chapter, they didn’t see bigger and faster horses. They recognized that such inventions had the potential to completely transform the ways that people traveled and moved goods, giving birth to new industries, infrastructures, and radically changed economies. They envisioned all the new things that would have to be created to support them and all of the old things that would no longer be relevant.
Thomas Edison’s approach to electric lighting was similarly systemic. Contrary to popular myth, he didn’t invent the incandescent light bulb. The great English chemist Humphry Davy laid the groundwork for it in 1809, with other inventors to follow. Edison didn’t start by asking how he could solve the technical problem of making a better lightbulb; that came later. Instead, he asked how he could get consumers to switch from kerosene to electricity. He understood that despite the many advantages of electric light, it would replace kerosene only if it had its own economically competitive network.
So while scores of people worldwide worked on improving the lightbulb, Edison conceived a fully operational system from scratch; one that had never existed before. Its technical platform included generators, meters, transmission lines, and substations, and he mapped out both how they would interact technically and how they would combine in a profitable business. This systems level view led to breakthrough insights. It was widely assumed, for instance, that low-resistance filaments were most appropriate for lightbulbs because they minimized the amount of energy lost as heat. But to make electric light economically competitive with kerosene lamps, Edison determined that he would have to limit the amount of costly copper used in transmission. Thus, he’d need a high enough voltage to maintain current within a narrow wire—and a high-resistance filament in the lightbulb itself.4 His search for the ideal lamp filament “was conditioned by cost analyses,” the science historian Thomas Hughes wrote in the journal Technology and Culture. “In his notebooks pages of economic calculation are mixed with pages reporting experimental data, and among these one encounters reasoned explication and hypothesis formulation based on science—the web is seamless. His originality and impact lie … in this synthesis.”5
Edison initially tested his high-voltage/high-resistance system in Lower Manhattan, a favorable foothold market because its buildings were close together and filled with potentially enthusiastic customers—Wall Street firms that worked late into the night and which, not coincidentally, were his potential investors. With J. P. Morgan’s financing, he soon controlled an empire of business entities, including the Edison Lamp Company, the Edison Machine Works, and the Edison Electric Light Company. Eventually they merged into the Edison General Electric Company, which was one of the twelve companies that made up the Dow Jones Index when it was first created in 1896.
But if General Electric (GE) began as the creation of a consummate future-back inventor/entrepreneur, it scaled into a conglomerate whose principal focus would be present-forward execution and improvement. Jack Welch, GE’s CEO from 1981 to 2001, was a huge exponent and evangelist for Six Sigma, a rigorous process-improvement methodology that consists of five phases: define, measure, analyze, improve, and control. Welch adopted Six Sigma in 1995 and claimed to realize $10 billion in profits from it in its first five years. Like Total Quality Management and Lean Management, Six Sigma is a management method that is focused on what business leaders typically (and rightly) spend the vast majority of their time and mindshare on: honing the existing enterprise rather than evolving or transforming it into something new. But it can’t guarantee the future. Many analysts now blame that same present-forward incrementalism, which worked brilliantly until it didn’t, for GE’s current troubles. When GE was delisted from the Dow Jones Index in 2018, its share price had fallen to $10 and was still rated “very expensive” by J. P. Morgan. As we write these words in the fall of 2019, it is still in the same range.
“The Theory of the Business”
Future-back thinking facilitates the development of a new vision of what a company—or any other kind of organization—can become. The great management theorist Peter Drucker called that “what it can be” the “theory of the business.” “Some theories of the business,” he wrote more than a quarter century ago, “are so powerful that they last for a long time. But being human artifacts, they don’t last forever, and, indeed, today they rarely last for very long at all. Eventually every theory of the business becomes obsolete and then invalid.”6 As GE’s leaders can attest, that is even more the case today.
While future-back thinking is more characteristic of entrepreneurs than the professional managers of long-standing enterprises, there are (and have always been) some notable exceptions, among them Mark Bertolini. In 2010, when he became Aetna’s CEO, the insurance giant had just completed a banner year in which its net income had soared 38 percent. The passage of the Affordable Care Act (ACA) appeared to hold out still more opportunities for Aetna to prosper, as it would make health insurance available to millions of new customers who hadn’t been able to afford it. But when Bertolini looked ahead, the view he saw was much bleaker. Though the ACA had become law, its future was far from assured. And business-as-usual wasn’t delivering what the big insurers promised their customers. Having survived a near-fatal skiing accident a few years before and nursed his son through a rare form of cancer, Bertolini had experienced the waste, inefficiency, and poor customer service the system offered firsthand, and he was convinced it had become unsustainable. As he would boldly state in a widely reported speech a few years later in Las Vegas, “The system doesn’t work. It’s broke today. The end of insurance companies, the way we’ve run the business in the past, is here.”7
Fortunately, Bertolini also conceived a more hopeful view of what Aetna could become. Unfettered by its past or present, he imagined how the company could flourish—and beyond that, how it could change the world for the better. To make that vision a reality, Aetna’s mission became “building a healthier world—one person, one community at a time.” Henceforth, Bertolini told his board, Aetna would focus on ensuring its customers easy access to high-quality, affordable healthcare, that their healthcare experience became simpler and more responsive, and that their health improved as a result (which would lower Aetna’s costs).
For years, Aetna operated primarily as a business-to-business company that treated the benefit managers at the large- and medium-sized corporations that purchased the bulk of its policies as its primary customers. The policies offered members access to a broad network of healthcare providers that delivered sick care and some wellness and prevention services. Those policies however, were becoming increasingly unaffordable for both employers and individual policyholders, who were accounting for a growing share of the market, and the outcomes they delivered were often poor. Putting in place more complicated claim payment services aimed at reducing waste and inefficiency only made the experience more complex and unappealing for members. Negotiating lower rates with providers proved insufficient to address the challenge of affordability. Aetna, Bertolini realized, needed to go to the source of the problem—the choices consumers make on a day-to-day basis that dramatically influence their health and therefore the cost of insuring them. To make healthcare affordable, and the healthcare experience simple and responsive, Aetna would have to actively partner with consumers to improve their health.
Now a part of CVS Health, Aetna has transformed itself into a consumer-centric company focused not just on the delivery of healthcare but also on health. “We know that healthcare is personal, and that’s why the people we serve drive every decision we make. We are focused on them, their communities, and all the factors that affect their overall well-being,” its new mission statement declares.8
Being able to see when it’s time for an organization “to reenergize, renew, reframe, and rethink [its] purpose,” as Microsoft CEO Satya Nadella (another future-back enterprise leader) puts it (and it is always that time in some part of an enterprise, if it’s big and complicated enough), is one part of what it means to be a visionary leader.9 The other is having a fully developed, fully actionable idea of what that new theory of the business should be—and a concrete plan to bring it into being.
Edison’s dream of an electric system that would be so efficient and inexpensive that “none but the extravagant would burn tallow candles”10 was an entrepreneur’s vision of a future that he and his organization would build from the ground up. Mark Bertolini built out his vision of an Aetna that would lower patients’ costs while improving their health outcomes by working within and beyond his company’s existing core. More than the vaguely inspiring aspirations that are conveyed by a traditional corporate vision statement (to be the best in our category), actionable visions are concrete enough to grab hold of and feasible enough that they can be built out strategically, though they must be continually revised and fine-tuned in the light of the feedback they produce as they come into contact with reality.
Vision vs. Strategy
It’s not just the what of a vision that is important but the future-back mental processes that leaders use to develop one. Steve Jobs’s vision of the digital hub was enabled by a way of thinking that allowed him to reframe not only Apple’s strategy but its very identity.
How might leaders of organizations of all kinds harness this kind of thinking? To answer that question, we must understand what exactly we mean by vision, and how it’s different than strategy.
The online Macmillan Dictionary defines vision as the ability to “think about or plan for the future, using intelligence and imagination”; an “idea or hope of how something should be done, or how it will be in the future”; and simply the “ability to see.”11 When we use it in a business context, it encompasses all of those meanings, but what we mean specifically is having a clear point of view on the markets of the future and the role that your organization can play in that new and different world. Having a really powerful vision can unleash the potential to transform whole industries.
When we call a business leader a visionary, we mean they have a vivid, systems-level understanding of their organization’s best possible future. But an inspiring and galvanizing vision is only the “what,” not the “how.” Vision is made actionable through strategy, which is the means to achieve it.
Simply put, strategy is a way to win a game. Vision tells you what game you will play. The two go together, as vision without strategy is inspiration without a real way to get to action.
The Leader as Learner
Whether they self-identify as a future-back visionary or a present-forward doer, every leader has the potential to see farther and clearer than he or she thinks they can, provided they are willing to learn new things and unlearn old ones.
In his book Hit Reset, Nadella12 describes how Carol Dweck’s book Mindset, which Nadella had read on his wife’s recommendation to gain a better understanding of his daughter’s struggles in school, opened his eyes to a fundamental problem with Microsoft’s culture.13 Dweck had identified two kinds of students: “know-it-alls” and “learn-it-alls.” Know-it-alls are smart but reluctant to stretch or challenge themselves lest they lose face with their peers or superiors, or worse still, find out they aren’t as smart as they think they are. Learn-it-alls, in contrast, accept it as a given that they don’t know all there is to know. While know-it-alls compete with and undercut their peers, learn-it-alls collaborate with them. While know-it-alls stick to platforms they thoroughly understand, learn-it-alls develop new ones. Microsoft, Nadella realized, had become a culture of know-it-alls who were avoiding the most difficult problems, foreclosing the possibility of true discovery. If the company was ever to regain its innovative edge, he wrote, it would have to become a culture of learn-it-alls. Future-back thinking requires a culture like this to succeed, and it starts with its leaders.
Both present-forward and future-back processes entail the acquisition and application of knowledge, but while present-forward processes use data linearly and more mechanistically (collect it, parse it, apply an algorithm, and execute), future-back processes entail a learning mode that is, to borrow an insight from Socrates, more akin to the kindling of a flame than the filling of a vessel. Geared to exploration, envisioning, and discovery, it can be depicted graphically as a generative loop, as seen in the diagram.
The Attributes of Future-back Leaders
There are a lot of good books that zero in on the key attributes of successful leaders, among them Warren Bennis’s classic On Becoming A Leader.14 Bennis stressed the “contagious optimism” that allows leaders to rally others around their visions, their eye for talent, and the integrity that fosters trust. Future-back leaders must have all of those virtues, of course, but what distinguishes them most is their capacity for learning. They are curious about everything and, in the spirit of the ancient philosopher Socrates, they also know what they don’t know. They are humble and good listeners (because it helps them to learn) and good stewards, in that they put their organizations’ long-term interests above their own. They are comfortable with ambiguity, able to make connections and recognize patterns in noise, and willing to go beyond facts and work off of hypotheticals if that will bring them closer to what they need to know.
Future-back leaders are oriented to the big picture but attentive to its individual pixels. They are decisive when they need to be, but patient to find the best solutions—and willing to iterate for as long as necessary to do so. Importantly, they are also skilled communicators and storytellers, which is how they convince their own people and other constituents to embrace their envisioned future. Above all, they are flexible and adaptable, willing to continually adjust and reshape their visions in light of what they learn as they work with their teams to translate them into reality.
Having defined the scope of an opportunity or a problem to be solved, knowledge and insights are developed in the exploration phase of the loop. Then a solution to the problem or a new idea or innovation to address the opportunity is envisioned. In the discovery phase, the solution, new idea, or innovation is tested in order to determine its viability. The learning that emerges from the testing is then used to develop still more questions, which yield deeper insights as the cycle of exploring, envisioning, and testing continues. With each turn through the loop, the idea or solution matures and becomes better understood and further fleshed out.
To illustrate the process, consider the basic steps of developing a new business or venture effort. First, you work to define what needs to be learned. Then you explore the future market opportunity you are trying to develop. You collect as much information as you can about the future market and develop assumptions about the consumer, technology, and other needs you will have to address. Then you envision a new business model or system that addresses all those assumptions. In order to discover a viable model that actually works in the market, you test your business model design in a pilot market, much like Thomas Edison did when he demonstrated his electrical system in downtown Manhattan. Armed with the insights you have gleaned from your test and learn effort, you then revisit “explore” to seek out new things to be learned and further insights and knowledge that will need to be developed. Then you revisit “envision” to adjust the business design and retest it in market to discover still more, turning your assumptions into knowledge. This learning loop is foundational to our future-back vision and strategy development process, which we will introduce to you in part 2, the “Application” section of this book.
Strategic Dialogues
The learning loop is best enabled through strategic dialogues—structured conversations in which leaders work through their ideas as a team, diverging and ultimately converging on key questions and assumptions. Often they are facilitated to encourage the kind of iterative, free-floating thinking that is needed, while at the same time keeping the discussion on track (you will read more about this in the pages to come).
Unstructured problem solving is necessarily messy and is best carried out collaboratively as a team, bringing a multiplicity of perspectives, skills, and knowledge to bear.
While the members of the team may or may not be visionary as individuals, if they are at once diverse in their capabilities, experiences, and cognitive styles, and disciplined enough that they can ultimately agree to speak in one voice, they can develop a shared language, vocabulary, and perspective, and a rich, multidimensional point-of-view. As the organizational behavioralist Frank Friedlander put it, “Differences must come into close contact for learning to occur.”15 What matters most is:
- Who’s at the table. The participants must include the people who make the resource allocation decisions that determine the success or failure of the new strategies and initiatives, plus a few key people who have special knowledge of relevant subject matter (perhaps the R&D executive who is responsible for the technology in question, or a key regional leader). The who is a matter of judgment; what’s critical is that there are not so many people that all their voices can’t be heard. Typically, that limits the group to at least five and at most fifteen participants.
- The ground rules. The discussion is guided by the future-back tenets we have described thus far, meaning that the focus is on what could be as opposed to what is. The purpose of the dialogues is as much to explore, imagine, and learn as to prove, confirm, or solidly decide. That means things can’t be rushed; these dialogues are very different than the typical two-hour strategy review, which frequently devolves into a race to get through a sixty-page PowerPoint deck.
- The process. Aided by the facilitators, the leaders work iteratively to: (1) Get to the right questions, (2) diverge and then converge on the right set of assumptions, and (3) use those assumptions to hone in on the right choices. Innovative techniques can be deployed to generate the right mindset for these conversations. We will describe a few in a later chapter; some of our Innosight colleagues have shared theirs in Harvard Business Review.16
Future-back Thinking as Applied to Business Processes
There are established processes in big organizations, both within particular functions and cutting across them, that line up as future-back. We briefly describe some of them below, while comparing them to their present-forward counterparts.
Finance and Accounting
Annual Budgeting vs. Zero-Based Budgeting
Budgeting for an existing business is typically built off an established base and updated by projecting current circumstances forward. Zero-based budgeting discards the base, building a budget that is based purely on what is envisioned being needed. Budgeting for new beyond-the-core initiatives should be zero-based so as not to force an emergent round peg into an existing square hole.
Marketing
Needs-Based Market Research vs. Jobs to Be Done Market Research
Needs-based market research looks to fill gaps in customers’ needs and wants specific to an existing product or service so they can be satisfied via incremental improvements to them. But as Peter Drucker said, “The customer rarely buys what the company thinks it is selling him.”17
Jobs to be done market research spreads the net much wider by asking consumers open-ended questions about what they are trying to get done or what progress they are trying to make in their lives. By posing questions in this way, researchers are more likely to surface consumers’ deepest desires. “Your customer is unlikely to give you the disruptive idea because if they could, they wouldn’t need you,” says Corning’s Wendell Weeks. “What they can do is identify their pain. Customers are really good at understanding it, but they don’t always know how to solve their pain. You should listen to the problem and then engage the right people to figure out how to solve it.”18 (See the sidebar for more on jobs to be done.)
Innovation Teams
Platform-Based Planning vs. Discovery-Driven Planning
Writing in Harvard Business Review in 1995, Rita McGrath and Ian MacMillan contrasted conventional platform-based planning, which, as they put it, “operates on the premise that managers can extrapolate future results from a well-understood and predictable platform of past experience,” with discovery-driven planning, which acknowledges that “at the start of a new venture, little is known and much is assumed.” Platform-based planning proceeds from present-forward thinking; discovery-driven planning is future-back, because, as McGrath and MacMillan wrote, it “systematically converts assumptions into knowledge as a strategic venture unfolds. When new data are uncovered, they are incorporated into the evolving plan. The real potential of the venture is discovered as it is developed.”19
A product development effort that is based on the core platform can be evolved and rolled out in a traditional stage or phase gate process (scoping, building a business case, development, testing and validation, launch). A beyond-the-core initiative, in contrast, may require reaching outside the enterprise to acquire new capabilities and business models. As it is developed and implemented, teams must leave room for serendipity, late learning, and strategic pivots.
Strategy
Typical Strategic Planning vs. Future-back Vision and Strategy Development
Traditional strategic planning is highly data-driven and analytic; it has evolved to be almost like budgeting, as it uses a company’s present financial circumstances as a base or template and then extends it into the future. Much of the work is carried out by staff rather than senior leaders themselves.
In contrast, future-back vision and strategy comes out of a process of active learning via structured dialogues, as leaders work together in a much more participative way to build a shared understanding of a very different future and align on it. It’s more organic; participants focus on the questions as much as the answers, on assumptions as much as facts.
Jobs to Be Done
Jobs to be done theory was first popularized by Clayton Christensen in his 2003 book, The Innovator’s Solution.20 Framing purchase decisions in terms of what a customer is trying to accomplish rather than their preference for one product feature over another allows you to think outside the box of your existing offerings and zero in on what might motivate a customer to buy a different and better solution (Clay famously illustrated this idea with an aphorism attributed to the longtime Harvard marketing professor Ted Levitt: “No one goes to the hardware store to buy a quarter-inch drill; you go to buy a quarter-inch hole.”) Thinking in terms of jobs rather than products gives you insights into not just your potential customers but your real competition in the future (and not just in your product category but in whole other industries as well, which might offer better solutions for your customer).
As Christensen and colleagues wrote in their recent book Competing against Luck, successful innovations “perform jobs that formerly had only inadequate or nonexistent solutions”—or that weren’t even recognized as needs until they were met.21
There are functional jobs (getting better gas mileage, for example), social jobs (wanting to be perceived as more energetic and confident than you might feel), and emotional jobs (wanting to feel like you’re a better spouse or parent) that businesses need to understand and respond to. Frequently, more than one job is relevant, which means that you must know how to prioritize them in terms of their degree of importance and the level of satisfaction that they provide. It’s also important to remember that the job to be done framework applies not just to your potential customers but to other stakeholders as well. Airbnb and Uber, for example, fulfill critical jobs on both the supply and the demand ends of their industries—allowing car and home owners to monetize their currently unproductive assets by giving people rides or renting space, while offering people who need to rent transportation or temporary accommodations a digitally accessible (and often cheaper) alternative to traditional taxis and car services and hotels. Another classic example of this is in healthcare, where the jobs to be done of payors, providers, and various regulatory bodies weigh as heavily as the patients’ jobs to be done.
Focusing on your customers’ future circumstances and jobs—as opposed to building off of your existing products’ features or your customers’ stated needs of today—gives you a better way to understand your opportunities. This is why a jobs-to-be-done approach is foundational for the design of future-back strategies, as you will see in chapter 3.
In the next three chapters, we will take you through our future-back vision and strategy development process, starting with a blank sheet of paper and ending with a set of concrete business initiatives. As you will see, vision and strategy development is never a one-and-done; leaders must revisit and reshape it continually as their assumptions are tested against reality.