What Makes a Company “Future Ready”?

What Makes a Company “Future Ready”?

In today's fast-paced and ever-changing business landscape, companies must constantly adapt and evolve to stay ahead of the competition. The concept of being "future ready" has become increasingly important, as it means scaling up capabilities that are relevant to future competition. Research has shown that companies that fail to make regular shifts in their know-how will face competition from copycats, fall behind in advancements, and ultimately fail.

To better understand what it takes to be future ready, a study was conducted analyzing 86 top companies across four industries. While each industry has its own unique playbook, there are universal managerial behaviors and cognitive outlooks that are common across top-performing companies. By identifying these insights and behaviors, other companies can gain valuable guidance on how to become more future ready.

One industry-specific insight that emerged from the study is the importance of not playing the zero-sum game with disruptors. In the fintech industry, for example, disruptors like PayPal and Block (formerly Square) were at the forefront. However, the leading incumbents, Mastercard and Visa, took a different approach. Instead of trying to outrun the disruptors and tech giants, they chose to partner with them. This partnership allowed them to leverage the innovative ideas and technologies being developed by third parties, who are often closer to the customers. This insight highlights the fact that a company's best feature may not necessarily be invented in-house.

A universal behavior that was found to be common among top-performing companies is the willingness to explore early-to-exploit know-how sooner. American Express, once the largest payment company, fell behind its competitors Visa and Mastercard because it failed to explore new areas while exploiting existing opportunities. The lesson here is that companies must dedicate a portion of their activities to exploring the new, even when early evidence remains unclear. This requires making difficult choices and tough tradeoffs guided by a vision of the future.

Another industry-specific insight that emerged from the study is the importance of going "deep" when everyone is digitalizing. Nike, for example, leverages advanced data analytics to gather insights and create a personalized shopping experience for its customers. The company's retail stores have transformed into immersive galleries, blurring the lines between the online and physical world. This insight highlights the need to differentiate oneself by embracing advanced technologies and leveraging data-driven approaches.

A universal behavior that was found to be common among top-performing companies is the ability to learn aggressively with a strong viewpoint. Companies like Nike, Lululemon, and Hermes exhibit a high degree of certainty and a strong viewpoint about the future. This allows them to update their mental models when new data emerge. By maintaining direct-to-consumer relationships, these companies are better able to discern consumer tastes and detect new behaviors.

In the high-speed tech sector, executives must pivot quickly to avoid being left behind. This industry-specific insight emphasizes the need for companies to branch out even faster. One universal behavior that can help companies move quickly is to be clear about the type of decision being made. By identifying which decisions are reversible and which are not, companies can make informed choices in a rapidly changing environment. Microsoft, for example, was able to scale new businesses such as cloud computing and augmented reality while maintaining a focus on preventing catastrophe.

Another industry-specific insight that emerged from the study is the potential benefits of vertical integration. Tesla, for example, uses its software muscle to take over functionalities that were previously located in purpose-built hardware. This allows the company to stand out in a highly competitive industry. A universal behavior that can help companies find a new viewpoint is to worry less about keeping up and more about finding new perspectives. The automotive industry, for instance, has traditionally been conservative and resistant to exploration and experimentation. However, to succeed in the future, companies in this sector must embrace new knowledge in software and electronics.

In conclusion, becoming future ready is essential for companies to thrive in today's rapidly changing business landscape. By incorporating industry-specific insights and universal behaviors, companies can position themselves for success. To become more future ready, here are three actionable pieces of advice:

1. Embrace partnerships and collaboration: Instead of trying to outrun disruptors, consider partnering with them to leverage their innovative ideas and technologies.

2. Dedicate resources to exploration: Maintain a healthy portion of activities dedicated to exploring new areas, even when early evidence remains unclear. Make difficult choices and tough tradeoffs guided by a vision of the future.

3. Embrace advanced technologies and data-driven approaches: Differentiate yourself by going "deep" when everyone is digitalizing. Leverage advanced data analytics to gain insights and create personalized experiences for your customers.

By following these pieces of advice, companies can enhance their ability to adapt and evolve, positioning themselves as leaders in their respective industries.