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Foresight as a core competence
Futures 33 (2001) 91–107 www.elsevier.com/locate/futures
Foresight as a core competence Edward Major a
a,*
, David Asch a, Martyn Cordey-Hayes
b
Open University Business School, Walton Hall, Milton Keynes MK7 6AA, UK b Cranfield University, Cranfield, Bedfordshire MK43 0AL, UK
Abstract Foresight is an elusive and oft-misunderstood term. Lacking a widely accepted definition, it is unclear when and whether it refers to a process, to a human attribute or competence, or to a national Foresight programme. This paper argues that foresight has developed largely in isolation to the extensive literature on business strategy. By relating foresight to this literature it can be put into a context with a far larger pool of existing knowledge. This paper relates foresight specifically to the core competence view of strategy. The resultant connections have implications for the process and competence concepts of foresight, national Foresight programmes and the core competence view. 2001 Elsevier Science Ltd. All rights reserved.
1. Introduction During the last decade, foresight has become a popular and fashionable concept. This paper aims to connect that concept to the strategy literature. Journals such as Futures and Foresight witness the growing literature in the field of foresight study. Juxtaposed with this are national Foresight programmes. The UK’s Foresight programme aims to use foresight concepts to inform Government spending priorities, and to shape a national culture of innovation throughout industry. Achieving the second of these aims has been problematic. Throughout its history, the concepts within the UK programme have failed to gain widespread industrial take-up. Industry it seems, fails to grasp the concepts of foresight, while the UK programme is criticised for failing to understand the needs of industry. This paper proposes that the problem stems in part from the manner in which Foresight has developed. The UK Foresight programme has always striven to be industry led. Proponents claim it to be strategic, but it has largely neglected the * Corresponding author. Tel.: +44-1908-655858; fax: +44-1908-655898. E-mail address: [email protected] (E. Major). 0016-3287/01/$ - see front matter 2001 Elsevier Science Ltd. All rights reserved. PII: S 0 0 1 6 - 3 2 8 7 ( 0 0 ) 0 0 0 5 7 - 4
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extensive literature on strategy from which valuable lessons may be learned. The strategy field has a far longer history than foresight, yet there is little crossover between them. The concepts developed to examine, explain, describe and prescribe strategy should be able to contribute to the strategic concept of foresight and to the UK Foresight programme itself. This paper concentrates on building a relationship between foresight and the core competence view of strategy. Core competence has been gaining popularity within the strategy literature concurrently to the growing interest in foresight. Section 2 reviews the foresight concept and the UK Foresight programme. Section 3 looks at the strategy literature, reviewing concepts of strategy in general and the core competence view in particular. Knowledge of foresight in industry was generated by a study into take-up of foresight concepts and the Foresight programme in small companies. This is reported in Section 4. The results and experience of this work allow connections to be drawn out between foresight and core competence. Section 5 shows how foresight can be viewed as a core competence. Section 6 then discusses the implications that follow for the foresight concept, the UK Foresight programme and the concept of core competence.
2. The concept of foresight and the UK Foresight programme Foresight principles are generally considered to have first gained popular use in Japan, where the Government has conducted national programmes approximately every 5 years since 1971. These have been instruments to look systematically into the long-term future. Their aim has been to identify areas of strategic research and generic technologies most likely to yield the greatest economic and social benefits [1]. The Japanese experience is considered as one reason for that country’s post-war global competitive success, and has heavily influenced national Foresight programmes in other countries. A complex relationship exists between foresight as a field of study and national Foresight programmes. Growth of the field has accompanied adoption of national programmes. The UK Foresight programme has been heavily influenced by foresight study. Many foresight practitioners in both academia and industry were consulted and continue to be involved. The Foresight programme has in turn contributed to the foresight field, not least by broadcasting and popularising the concept. 2.1. The concept of foresight “Foresight” is an elusive term having different meanings to different people. Slaughter presents a comprehensive study of the foresight principle. He considers that: Foresight is not the ability to predict the future…It is a human attribute that allows us to weigh up pros and cons, to evaluate different courses of action and
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to invest possible futures on every level with enough reality and meaning to use them as decision making aids…The simplest possible definition [of foresight] is: opening to the future with every means at our disposal, developing views of future options, and then choosing between them [2] (p. 1). According to Slaughter, foresight is an attribute, or a competence; it is a process that attempts to broaden the boundaries of perception in four ways [2] (p. 48): 앫 By assessing the implications of present actions, decisions, etc. (consequent assessment); 앫 By detecting and avoiding problems before they occur (early warning and guidance); 앫 By considering the present implications of possible future events (pro-active strategy formulation); 앫 By envisioning aspects of desired futures (normative scenarios) Normative scenarios move foresight beyond guidance into proactive consideration of desired futures. Scenarios are pictures (mental representations) of possible future situations designed to help organisations to make decisions in the present. Scenario building is a common theme in foresight study. The Small Business Foresight unit at Durham University Business School uses scenarios to help small businesses formulate their own visions of the future [3,4]. Latterly, the utility of scenario building has been recognised in the UK Foresight programme [5]. Horton discusses the elements that should constitute a successful foresight process. Successful foresight, she argues entails three consecutive phases: Phase one comprises the collection, collation and summarisation of available information…and results in the production of foresight knowledge. Phase two comprises the translation and interpretation of this knowledge to produce an understanding of its implications for the future from the specific point of view of a particular organisation. Phase three comprises the assimilation and evaluation of this understanding to produce a commitment to action in a particular organisation [6] (p. 6). Horton contends that translation and interpretation is the most critical phase [it is “what foresight is all about” [6] (p. 7)]. She also holds that a foresight process must be carried through to a conclusions phase before its success can be judged. 2.2. The UK Foresight programme The starting point for the UK Foresight programme was a Government white paper on science and technology [7]. This recognised that the nation’s science base was not being reflected by corresponding innovation in industry. Foresight was proposed as an initiative to address the problem. The Foresight programme:
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is a “meta-level” programme…designed to provide an overall direction to and justification for science and technology policy. It seeks to co-ordinate research and innovation agendas across public and private organisations, industrial and service sectors, and academic disciplines by developing new alliances between the producers and consumers of knowledge [8] (p. 528). Foresight’s aims were, and are, grand in scale: The Foresight programme aims to create sustainable competitive advantage and enhance the quality of life, by bringing together business, the science base and Government to identify and respond to emerging opportunities in markets and technologies…Foresight is about creating a culture change in the way the UK approaches the future [9]. The main methodology was to establish panels of expert personnel to identify market, product and technology trends underlying the Foresight aim. Since the panels’ initial reports [10], the DTI and the Office of Science and Technology have produced a series of documents with the aim of disseminating the Foresight findings and the Foresight culture to a wider audience. Dissemination is aimed to reach: …beyond the scientific and technological functions in businesses to key decision makers and opinion formers in functions such as corporate strategy, marketing and finance [11] (p. 12). Following the Japanese experience, reconstituted Foresight panels started a second major Foresight exercise in 1999, 5 years after the first [12]. The UK Foresight programme has drawn extensive comment from both academics and industrialists. It has been criticised for the influence of short-term political pressures while at the same time being commended for its potential and for its long-term aims [13,14]. According to the Royal Society [15] the increased networking within and between academia, industry and Government, rather than any specific outputs, was the major benefit from the early stages.
3. The strategy literature and the core competence view of strategy The study of business strategy predates foresight by a long way. The concept of foresight has been studied in relative isolation. The UK Foresight programme especially has neglected the vast literature available in the field of business strategy. As an established discipline, strategy theory has progressed through development of models and frameworks. This section briefly reviews several important models, showing the development of theory, before considering the core competence view in greater depth.
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3.1. Models of strategy Teece et al. [16] assess several of the more important and relevant models of strategy. Through the 1980s the dominant model was the competitive forces approach [17]. In this model firms use strategy to relate to their environment. The key aspect is the industry or industries in which a firm competes. The inherent profit potential of an industry is determined by five industry level forces — barriers to entry, threat of substitution, bargaining power of buyers, bargaining power of suppliers and rivalry among incumbent firms. The strategic conflict approach [18] emphasises one of the five forces while giving a broader view to the firm’s environment. This is a conflict-based approach; rivalry and interaction between firms is the central theme. Firms make moves that influence the behaviour of rivals and therefore of the market environment, such as investment in new capacity [19] or in advertising [20]. Environment in this model goes beyond the firm’s industry to comprise all factors that influence market outcomes. The competitive forces and strategic conflict approaches are market-based views. Firms formulate strategy to develop a fit with their environment, the key determinant factor of which is the market, or industry. 3.2. Development of the core competence view The competitive forces and strategic conflict approaches emphasise forces external to the firm (i.e. the market). The resource-based approach is a firm rather than industry-centred view. Firms’ resources are the central considerations and the primary constraints by which they can formulate and frame their strategy [21]. Supporting the primacy of firm-specific factors, a study by Rumelt [22] showed that profit differences within industries exceeded those between industries. The resource-based approach regards competitive advantage to lie in internal, firm specific resources such as lower costs or higher quality [16]. Resources themselves can be considered to be generic, equally available to all. Consequently, competitive advantage accrues from the way in which resources are bundled together. Whereas in the strategic conflict approach advantages accrue to firms from the intellectual ability of their managers [16], in the resource-based approach management abilities are part of the firms’ resource base. The resource-based view holds competitive advantage to lie in a unique mix of the firm’s resources, that is, upstream of their products. The core competence view of strategy takes this logic further; competitive advantage accrues from a firm’s competencies. Competencies lie behind a firm’s ability to bundle together generic resources into a competitive advantage. Prahalad and Hamel, in giving a practitioner’s guide, define core competencies as the collective learning in the organisation, especially how to co-ordinate diverse production skills and integrate multiple streams of technologies [23] (p. 80). Hamel [24] describes five key characteristics of core competencies. Firstly they are an integration (or a “unique mix” [25]) of constituent skills and technologies. They are unlikely to reside in a single individual, deriving rather from the combi-
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nation of individuals’ abilities and firms’ systems. Secondly they are knowledge rather than asset based; they are an activity, a result of learning. Thirdly they have customer value; they are “the skills which enable a firm to deliver a fundamental customer benefit” [24] (p. 13). Fourthly they are competitively unique; to be core the firm must hold a sufficiently superior competence over its competitors (they must be hard to imitate). Finally, core competencies should provide a gateway into new markets; the firm must be able to envision new product markets that can arise from them. The core competence view has become a popular concept. Yet, like foresight, a clear conceptualisation of the term, and an overall integration of various authors’ contributions remain elusive [26,27]. Some authors (e.g. [26,27]) have therefore tended to use the term competence rather than core competence, or to use the two terms interchangeably. In attempting a conceptualisation, Sanchez et al. define competence as:
an ability to sustain the co-ordinated deployment of assets in a way that helps a firm achieve its goals [26] (p. 8).
They hold that for a firm activity to be a competence it must meet the conditions of organisation, intention and goal attainment [26]. A conceptualisation of what makes a competence core can be derived from the result of its use; for the competencies of a firm to be core they must provide it with a competitive advantage. While the core competence view became popular during the 1990s, its development can be seen in older works. The resource-based approach on which it draws can be traced to the work of Penrose [28]. Hofer and Schendel reflect both resourcebased and core competence views: They propose that assessment of a firm’s “unique resource deployments (or distinctive competencies)” is an appropriate criterion for determining which industry it should enter [29] (p. 151). This they argue, is a superior criterion to using some measure of industry attractiveness (as in the competitive forces approach). The industry based models have an outward focus, while the resource based view might be too inwardly focused [30]. In going beyond (or rather beneath) firms’ resources, the core competence view potentially gives a more balanced approach. Few authors within the core competence literature specify particular competencies. Breaking with this tendency, Turner and Crawford [31] distinguish 11 competencies, described by their concepts and by what they enable the holding organisation to do. Competencies specified are performance management, resource application, motivating and enthusing, integration of effort, enaction, communication, commitment formation, pathfinding, development, systems/process engineering and option management. A firm’s competence in each of these areas influences the strategies it can formulate. The competencies described by Turner and Crawford are generic; like resources, they are in principle equally accessible to all. Where a competence gives the holding firm a competitive advantage it is a core competence of that firm. These generic competencies will be returned to in Section 5.
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4. Empirical fieldwork This section reports on fieldwork that was undertaken as part of a major research study into foresight concepts and the UK Foresight programme [32,33]. The research study started from recognition that the Foresight programme was failing to reach small companies in significant numbers [14]. While it has achieved much in terms of its use to inform Government spending decisions and in popularising the foresight concept, the programme has failed to reach sufficiently into industry to enact any significant cultural change. Further efforts at improving dissemination have had little overall impact on firms’ Foresight awareness, and even less in changed firm behaviour1. The study examined take-up of the Foresight programme and foresight concepts in small companies, setting out ways in which small companies might increase their openness to the Foresight programme and foresight concepts, and thus more readily take on a foresight culture. The centre of the research was a programme of interviews with managers in small companies. Forty-nine companies were sampled, 27 from the specialist organic chemicals sector and 22 from the electronic sensors sector. The criteria for selecting sectors were that they should be technologically progressive, highlighted as priority areas by the Foresight programme, be accessible for research, form discrete samples and come with recommendation of informed personnel. These interviews were supported by discussions with personnel in research associations, innovation centres and industry associations, and with people involved in foresight research and the Foresight programme. Information was sought on the general question of how small companies learn about and acquire new knowledge. More specifically the survey assessed their knowledge and use of the Foresight programme and of the process and human attribute/competence (as in Slaughter) concepts of foresight. The fieldwork findings were coded and analysed in four streams. The relevant outcomes from this process are discussed in the following subsections. The four streams were: knowledge and use of foresight concepts and the Foresight programme; reliance on the supply chain for acquisition of new knowledge; use of the business support community for acquisition of new knowledge; and the importance for new knowledge acquisition of interpersonal networking. 4.1. Foresight concepts and the foresight programme Initial questions gauged sampled companies’ awareness and perception of foresight concepts and the UK Foresight programme. Further questions assessed how companies have responded to their foresight knowledge, and what impact it has had on them. Foresight knowledge was higher than expected in the specialist organic chemicals sample, but lower in the electronic sensors sample. Almost half of the chemicals sample held a working knowledge of the Foresight programme (i.e. a gen-
1
There is a lack of clearly documented evidence to formally back-up this widely acknowledged assertion. Industrialists, academics, foresight practitioners and Government personnel directing foresight policy all recognise this state of affairs.
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eral knowledge of Foresight ideas and publications). Only five had no knowledge of the programme, while six held extensive and up to date knowledge. By contrast, only two sensors companies held any working knowledge of the Foresight programme. As expected the Foresight programme was found to have had little overall impact. Some companies were taking notice, but most impacts were second order at best. The most important finding was the existence of a discrete four-company subgroup within the chemicals sample. These respondents claimed to use the foresight concept as a regular part of their business. All four claimed the practice to predate their knowledge of the Foresight programme. The programme’s contribution has been a validation of their existing practices. Indeed, three have been giving the benefit of their own foresight experience to the Foresight programme through direct involvement of company personnel. These four companies already have the foresight culture that the programme aims to build. In all four the outwardly focused personal attitudes and knowledge of staff are vital to their foresight culture. These companies are henceforth referred to as the foresighting group. No sensors companies entered the foresighting group. However, changes were being initiated in three further chemicals companies and one sensors company that might move them towards a foresight culture. The impact of the Foresight programme on this second subgroup is again confirmatory, validating the need for the changes that are already underway. This second group of companies are henceforth referred to as the intermediate group. 4.2. Reliance on the supply chain Previous research has shown that customers and suppliers are always the most extensive contacts that a company has [34,35]. The interviews sought to establish how far small companies’ supply chains are used for the acquisition of new knowledge. The general finding from both samples was that supply chains are more important knowledge sources than companies’ use of foresight. However the foresighting group all reported low use of supply chains as a knowledge source. Conversely, the companies with the lowest foresight knowledge tended to report high use of the supply chain as a knowledge source. The tentative conclusion is that companies with a greater foresight orientation to their culture make less use of the supply chain for knowledge acquisition. 4.3. Use of the business support community Outside organisations provide another potential source of new knowledge. The business support community constitutes a large group of outside bodies. It includes business agencies such as Business Links and Training and Enterprise Councils, trade and professional bodies, research associations, universities and consultants. All of these can play an intermediary role, increasing accessibility of new knowledge to their company contacts. The research therefore investigated interactions between sample companies and intermediaries, analysing the levels to which they are used for acquisition of new knowledge. Some companies were found to have extensive
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intermediary contacts, while others had very few. However, rather than overall use of intermediaries, the most important finding concerned the pattern of that use. Some sampled companies were found to have homogenous, moderate level contacts with a large number of different intermediary bodies. Other companies had heterogeneous contacts, deep and extensive interactions with a few bodies, but only cursory contacts with others. Comparing this finding with companies’ foresight knowledge shows that the companies with the most heterogeneous intermediary interactions were those comprising the foresighting group. In contrast, companies with the most homogeneous intermediary interactions had low foresight knowledge. Intermediary interactions for the intermediate group were more homogeneous than for the foresighting subgroup, but less than for the lower companies. 4.4. Importance of interpersonal networking The final analysis stream looked at the personal networking that goes on between company personnel and people in outside organisations (e.g. in suppliers, customers, competitors and intermediaries). All companies network with outside personnel, using a whole range of methods from the rigidly formal to the very informal. To what extent are these networks used for new knowledge acquisition? The research found that, on average, networking is of approximately the same order of importance to the sampled companies as is their reliance on the supply chain. However, there is an inverse relationship between the two streams. As a guide, companies making the most extensive use of networking for knowledge acquisition tend to place lower reliance on the supply chain. Networking thus also tends to follow positive trends with foresight knowledge and heterogeneous intermediary interactions. A second finding is that knowledge acquisition derives more easily from informal networks than from rigidly formal networks. 4.5. Multi-stream analysis Relationships are apparent among the four streams of analysis. The four streams are indicators of a company’s overall managerial attitude to the future. Looked at together, the streams give a picture of the characteristics of managerial attitudes in small companies. Knowledge and use of foresight, heterogeneous use of the business support community and the importance of networking for knowledge acquisition were found to follow a positive general trend with regard to one another. Conversely, greater use of the supply chain as a knowledge source generally accompanied lower results in the other streams. The companies can be distinguished according to three broad types of managerial attitude. The first type is represented by the foresighting group. These are characterised by their high foresight knowledge and use of foresight practices, highly heterogeneous use of intermediary organisations, extensive external networking and low reliance on the supply chain. At the other extreme are companies with no or very low foresight knowledge and no use of foresight practice, homogeneous use of intermediaries, low use of external networking and high reliance on the supply chain. The intermediate group exhibit intermediate characteristics in all
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four streams. Managerial attitude may be described as strategic for the foresighting group, responsive for the intermediate group and reactive for the lowest group. Fig. 1 illustrates these findings. The strategic, foresighting companies all exhibit coherent characteristics. Each characteristic is reversed for the reactive group and present at intermediate levels within the responsive group. These four characteristics are therefore considered significant indicators of a company’s managerial attitude to the future, and of the proximity of that attitude to the foresight culture.
5. Foresight and the core competence view of strategy 5.1. The role of the individual The four-stream analysis reported in Section 4 places strong emphasis on the role of individual managers. The impact of managerial attitudes and attributes is central. Even in the foresighting companies their foresight knowledge was attributed to individual staff rather than to company systems or procedures. Accumulation of foresight knowledge and a company’s use of foresight concepts build primarily on the proclivity of one manager or a small management group. In two of the four identified
Fig. 1.
Characteristics of managerial attitudes in small companies.
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foresighting companies a single leader (the chairman in one, the technical director in the second) is the stimulus for the companies’ foresight inclinations. A third company was set up by a group of four managers collectively holding a propensity for foresight. The four intermediate companies in the sample are enacting changes moving them towards a foresight culture. In two of these appointment of a new chief executive with strong foresight inclinations was the opening step. Interactions with the business support community are similarly affected. Managers’ inclinations to look for solutions outside of the company lead their company into more extensive use of intermediaries. Networking is even more strongly influenced by individual inclinations. Informal networking, so useful for acquiring new knowledge, comes naturally to strategic, outwardly focused managers. The leaders of reactive companies are focused much more on their companies’ immediate environment. Lacking the inclination to look to outside sources, they rely on their existing systems and contacts. The result is dependence on their supply chains. Further evidence for the individuality of small companies comes from discussions with business support agencies and research associations. These organisations do not distinguish groupings of small companies. When formulating their offerings, they take one of two approaches: the broad method is to offer a standard, undifferentiated service to all prospective clients. The alternative is to deal with each on an individual basis. Both approaches recognise that small companies are all vastly different, the first implicitly, the second explicitly. 5.2. Foresight and core competence Consideration of individuals’ importance and proclivities returns thoughts to the discussion of strategy and core competence. From the strategy literature, Teece et al. [16] hold that firms’ advantages ultimately accrue to the intellectual ability of managers. The abilities, attitudes and attributes of company managers are central to the core competence view of strategy. Managers’ proclivities are part of the “collective learning in the organisation” [23]. The critical element underlying foresight is thus also a critical element of core competence. Turner and Crawford’s 11 competencies were listed in Section 3.2. Among their list is the competence of pathfinding. This they describe as follows: [Pathfinding] is the corporate competence to identify, crystallise and articulate achievable new directions for the firm. Part of the competence stems from an outward and future orientation of the firm’s members and the intelligent use of systems and processes that empower this. Environmental scanning systems; strategic planning exercises; processes which collect competitor and market information in a systematic and disciplined way; involvement in trade and research groupings that are concerned with corporate or national development; all foster widespread involvement in opportunity seeking and the crystallisation of informed views about new directions. Forums for discussions, with different and sometimes overlapping membership, help to sustain this competence.
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Pathfinding involves a mixture of search and creativity. It also depends on selfknowledge and an understanding of the transformability of the firm’s own assets, i.e. the degree to which it can practically apply or mould them to other uses. The paths that search reveals are only relevant to the extent that the organisation is able to exploit them. This, in turn, depends to some degree on creativity in finding ways to exploit or reconfigure possibilities. This competence impacts on future performance [31] (p. 253). This could almost have been written as a description of foresight. It parallels much of the concept of foresight, of the UK Foresight programme and of the fieldwork findings. The foresight concept is about “opening to the future…[weighing] up pros and cons, [evaluating] different courses of action and [investing in] possible futures” [2] (p. 1). The result of this foresight is “[identification, crystallisation and articulation] of achievable new directions for the firm”. Pathfinding stems from an “outward orientation of the firm’s members”. Fieldwork showed outward-orientation to be the critical element in a foresighting company. Outward-focused management inclinations underlie the “systems and processes” that a pathfinding firm uses. Environmental scanning, strategic planning and collection of competitor and market information are all activities of an outward-looking, foresighting company. They are all part of Horton’s first phase (collection, collation and summarisation) of successful foresight [6]. The UK Foresight programme carried out environmental scanning, strategic planning and information collection processes in a centrally co-ordinated manner. Involvement with “trade and research groupings” helps to crystallise “informed views” for pathfinding. The fieldwork identified greater interaction with these intermediary bodies as an indicator of a firm’s outward focus and foresight culture. Similarly, “forums for discussion [that] help to sustain this competence” are indicative of a propensity for networking. Pathfinding involves “search and creativity” and “self-knowledge”, all of which begin with the individual. “Transformability of assets” is less explicit within foresight than pathfinding. Discussions of foresight and manager ability do however bring to mind that management ability should be considered among a firm’s assets, as in the resource-based view of strategy. Pathfinding requires “creativity [to] exploit or reconfigure possibilities”. Creativity also starts with individuals. It recalls Horton’s second phase of successful foresight, translation and interpretation [6]. Turner and Crawford themselves later suggest that a firm’s pathfinding competence often relies on “the personal competence of a CEO or a few key appointees” [31] (p. 261). Such competencies may be imported into the firm [31], as with the appointment in two of the sampled intermediate companies of new chief executives with strong foresight inclinations. The final element of Turner and Crawford’s description of pathfinding is the fundamental outcome both of successful foresight for an individual organisation and of the UK Foresight programme for the nation; “[impact] on future performance”. It is clear that foresight, as elucidated by the fieldwork presented in Section 4, has a great deal in common with the competence of pathfinding. Indeed, given the above descriptions, it is difficult to see any fundamental difference. This paper contends that foresight and Turner and Crawford’s competence of pathfinding are
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describing the same fundamental concept. The major differences between foresight and pathfinding lie in their comparative states of development. Both foresight and the core competence view of strategy gained recognition during the 1990s. There is only limited research on any individual example of a core competence, as the core competence literature is more concerned with enabling managers to identify idiosyncratic competencies of their own firms. There have been few attempts to formulate generic competencies, as Turner and Crawford do. As a result the concept of foresight has been far more extensively researched than that of pathfinding. However foresight’s connections with pathfinding, with core competence, and more fundamentally with the strategy literature, have not been clearly made. In expressing the equivalence between foresight and pathfinding, this paper contends that foresight is a competence. Where it underpins a firm’s competitive advantage foresight is a core competence. To maintain this assertion it must be shown that foresight fulfils all of the characteristics of a core competence, identified earlier. Table 1 lists these characteristics and shows how foresight fulfils them. Core competencies were first defined as an integration of skills and technologies. Foresight has been shown to reside initially in individual managers. Even where foresighting expertise relies on a single person the activity of bringing that expertise into the firm requires integrated teams. Successful foresight identifies and exploits new opportunities. Successful exploitation of opportunities from new technologies requires integration of those technologies with the firms’ existing skills and technologies. It is from this integration of individuals’ foresight competence with firms’ skills and technologies that a foresight culture can develop. Core competencies are knowledge based rather than asset based. Foresight is an activity, dependent on tacit knowledge rather than on the firm’s physical assets. Core competencies have customer value. Foresight extends the customer value of the firm’s offerings into the future. Core competencies are competitively unique. Foresight enables firms to build competitive advantage for the future. It allows a firm to sustain its competitive position by enabling it to revise or replace declining products more effectively than competitors. Core competencies must be difficult to imitate. Foresight initially comes to firms from individuals, but it is operationalised through the formation of systemic processes and practices within the firm. Only the surface practices may be visible from outside, and therefore imitable. Systemic and tacit knowledge are hard to imitate. It is through Table 1 Core competence and Foresight characteristics Core competencies
Foresight
Integration of skills and technologies Knowledge based Customer value Competitively unique Difficult to imitate Gateway to new markets
Resides in individuals and teams Depends on tacit knowledge Extends to future benefits Enables the building of competitive advantage Based on systems and tacit knowledge Helps to identify new opportunities
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integration of individual expertise with systems that firms benefit from foresight. Even where firms acquire the individual expertise through acquiring foresight inclined people it will take time to emplace the systems. Finally core competencies should provide a gateway to new markets. Foresight inherently provides such entry. Identification and exploitation of new opportunities is both an outcome of applying the foresight concept and one of the aims of the UK Foresight programme.
6. Implications of viewing foresight as a core competence Section 5 has shown how the concept of foresight can be seen as a core competence. All of the recognised characteristics of a core competence are fulfilled. Viewing foresight as a core competence has significant implications. 6.1. Implications for the foresight concept and the UK Foresight Programme Foresight has been an elusive concept, difficult to grasp and define. Extensive literature on the foresight concept and the Foresight programme has failed to clarify its meaning. Core competence, being within the field of business strategy, has a clear context in which to be viewed. Core competence can be compared with other strategy theories and its historic development traced. Its placement in a well-established academic and business discipline gives clear reference points for its study. Foresight lacks the reference points of an existing, established discipline. Viewing foresight as a core competence puts it into a context. Establishing relations between foresight and strategy makes the whole of the strategy literature available as a context for the study of foresight. The UK Foresight programme, in its efforts to be industry driven and politically acceptable, is particularly guilty of running in isolation. Showing the connection between foresight and the strategy discipline also places the Foresight programme into a strong context. The core competence literature strives to make strategy relevant and accessible to companies. Like the Foresight programme, the competence writers are trying to encourage a new industry culture. Their aim is to enable industry “to rethink the concept of the corporation itself” [23] (p. 79). Significant implications follow from understanding foresight as a core competence and accessing the core competence literature. Dissemination of the Foresight programme findings and the foresight culture should become far more effective. Presenting foresight as something to help firms build up a vital core competence will make it much more relevant to industry. The implications of viewing foresight as a core competence thus have benefits for industry. Viewing foresight as a core competence aids the study of international business. Nations as well as firms can hold core competencies. Studying national competencies fosters understanding of the effects of national cultural differences on business. The core competence of foresight is held by Japan. The Japanese have been building it for thirty years through their ongoing national Foresight programmes.
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6.2. Implications for core competence and the strategy literature The strategy discipline and the core competence view also benefit from the link to foresight. As shown in Section 5.2, there is little extant research on individual core competencies. Foresight stands as an example of a well-researched core competence. It gives extended treatment to the identified core competence of pathfinding. Foresight research shows how the constituent elements of an individual core competence can be identified. It shows how a core competence can be emplaced, nurtured and sustained. National Foresight programmes show how a centrally co-ordinated scheme can impact upon the core competencies of firms and of nations. Connecting foresight to core competence adds a new field of study to the strategy discipline. The foresight literature is expanding. National Foresight programmes have been started in numerous industrial and industrialising countries [36]. The strategy discipline is thus connecting to what has become a very fashionable field of study. 6.3. Implications for future research The purpose of this paper has been to make explicit the connections between existing strands of research, rather than to highlight a need for new research. Nevertheless, developing the idea of the core competence of foresight has raised several fundamental areas that may benefit from future work. Most basically, future research into foresight, and the UK Foresight programme, could benefit from being carried out within the context of core competence and the strategy literature. Secondly, future foresight work could benefit from crossovers with other strands of the strategy literature. Pioneering work by Hamel and Prahalad [37] begins to address the issues raised. From a grounding in strategy they present a treatise on the need for firms and industries to compete for their future, not just for their present or past. Industry foresight, according to Hamel and Prahalad, addresses the critical questions of the future customer benefits to be offered, the new competencies required to offer those benefits and the new customer interface required to supply those benefits. Hamel and Prahalad do not make reference to national Foresight programmes. Neither do they refer to the foresight literature, or to foresight as a process or attribute. Hamel and Prahalad point the way forward for future work. Interdisciplinary research that includes both strategy and futures/foresight perspectives is needed to strengthen the foresight-strategy link. This paper has shown the building blocks for emplacing the core competence of foresight — through the integration of individuals’ expertise with firms’ systems. It has left unanswered the question of how individuals’ foresight inclinations are transferred into firms’ foresighting systems, and into core competencies; i.e. how individuals’ foresight competence gives rise to an organisational foresight culture. This could be addressed by future research to strengthen the theoretical and conceptual bases of the competence of foresight/pathfinding. A connection could be built here with the literature on organisational learning (e.g. [38,39]). Lastly it was suggested above that Japan holds the core competence of foresight. Core competencies held at the national level are part of the national culture. Differences between countries’
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core competencies could go far in explaining differences in their business cultures. Further cross-disciplinary study is suggested. Research into national core competencies could be heavily informed by cultural studies within the anthropology discipline.
7. Conclusions This paper has argued that the foresight concept, and the UK’s national Foresight programme in particular, has been handicapped by its minimal interaction with the strategy literature. By reviewing foresight in conjunction with the strategy literature, it has been possible to show that foresight can be thought of as a core competence. The study into foresight in small companies, reported in Section 4, revealed some of the indicators of forward focused, foresightful companies. From this was highlighted the critical importance of the tacit knowledge of individual managers. This study allowed foresight to be compared to the core competence view of strategy. The result is the central contention of this paper: that the concept of foresight and the core competence of pathfinding are describing the same fundamental concept.
References [1] Kuwahara T. Technology forecasting activities in Japan. Technological Forecasting and Social Change 1998;60(1):5–14. [2] Slaughter RA. The Foresight Principle: Cultural Recovery in the 21st Century. London: Adamantine, 1995. [3] Durham University Business School. Foresight Bulletin, Issue 6. Durham: Durham University Business School Small Business Foresight Unit, 1997. [4] Durham University Business School. Responding to the future. Durham: Durham University Business School Small Business Foresight Unit, 1997. [5] DTI. Foresight: Future markets–future business. London: HMSO, 1998. [6] Horton AM. A simple guide to successful foresight. Foresight 1999;1(1):5–9. [7] Chancellor of the Duchy of Lancaster. Realising our potential: A strategy for science, engineering and technology. London: HMSO, 1993. [8] Rappert B. Rationalising the future? Foresight in science and technology policy co-ordination. Futures 1999;31:527–45. [9] Office of Science and Technology. Foresight actions and achievements 1997. London: HMSO, 1997. [10] Office of Science and Technology. Progress through partnership 1–15. London: HMSO, 1995. [11] The Engineer Newspaper. A Question for the Panel. 5th December 1996;12–13. [12] Office of Science and Technology. Blueprint for the next round of foresight. London: HMSO, 1998. [13] Georghiou L. The UK Technology Foresight Programme. Futures 1996;28(4):359–77. [14] Tann J, Platts A. Foresight for SMEs: Implications for policy and practice. University of Birmingham Working Papers in Commerce: WPC98/04, 1998. [15] The Royal Society. Technology foresight: The views of the Royal Society. London: The Royal Society, 1995. [16] Teece DJ, Pisano G, Shuen A. Dynamic capabilities and strategic management. Strategic Management Journal 1997;18(7):509–33. [17] Porter ME. Competitive strategy. New York: Free Press, 1980. [18] Shapiro C. The theory of business strategy. RAND Journal of Economics 1989;20(1):125–37.
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[19] Dixit A. The role of investment in entry deterrence. Economic Journal 1980;90:95–106. [20] Schmalensee R. Advertising and entry deterrence: An exploratory model. Journal of Political Economy 1983;91(4):636–53. [21] Grant RM. The resource-based theory of competitive advantage: Implications for strategy formulation. California Management Review 1991;33(3). [22] Rumelt RP. How much does industry matter? Strategic Management Journal 1991;12(3):167–85. [23] Prahalad CK, Hamel G. The Core competence of the corporation. Harvard Business Review 1990;May-June:79–91. [24] Hamel G. The concept of core competence. In: Hamel G, Heene A, editors. Competence based competition. Chichester: Wiley, 1994. [25] Chiesa V, Barbeschi M. Technology strategy. In: Hamel G, Heene A, editors. Competence based competition. Chichester: Wiley, 1994. [26] In: Sanchez R, Heene A, Thomas H, editors. Dynamics of competence-based competition. Oxford: Elsevier Science, 1996. [27] Bogner WC, Thomas H, McGee J. Competence and competitive advantage: towards a dynamic model. British Journal of Management 1999;10:275–90. [28] Penrose E. The theory of the growth of the firm. New York: Wiley, 1959. [29] Hofer CW, Schendel D. Strategy formulation: Analytical concepts. St. Paul, Minnesota: West Publishing, 1978. [30] Bogaert I, Martens R, Van Cauwenburgh A. Strategy as a situational puzzle: The fit of components. In: Hamel G, Heene A, editors. Competence-based competition. Chichester, UK: Wiley, 1996. [31] Turner D, Crawford M. Managing current and future competitive performance: The role of competence. In: Hamel G, Heene A, editors. Competence-based competition. Chichester, UK: Wiley, 1994. [32] Major EJ. Tailoring Foresight to the needs of the SME. Unpublished PhD thesis, Innovation and Technology Assessment Unit, School of Industrial and Manufacturing Science, Cranfield University, 1999. [33] Major EJ, Cordey-Hayes M. Engaging the business support network to give SMEs the benefit of Foresight. Technovation 2000;20(11):589–603. [34] Moore B. Sources of innovation, technology transfer and diffusion. In: Cosh A, Hughes A, editors. The changing state of British enterprise. Cambridge: ESRC, 1996. [35] Woolgar S, Vaux J, Gomes P, Ezingeard J-N, Grieve R. Knowledge and the speed of transfer and imitation of organisational capabilities: An empirical test. Organisation Science 1998;6(1):76–92. [36] Grupp H. Technological forecasting and social change. National Foresight Projects (Special Issue) 1999;60(1). [37] Hamel G, Prahalad CK. Competing for the future. Boston: Harvard Business School Press, 1994. [38] Dodgson M. Organizational learning: A review of some literatures. Organisation Studies 1993;14(3):375–94. [39] Kim DH. The link between individual and organisational learning. Sloan Management Review 1993;37(Fall):37–50.
Foresight as a core competence Edward Major a
a,*
, David Asch a, Martyn Cordey-Hayes
b
Open University Business School, Walton Hall, Milton Keynes MK7 6AA, UK b Cranfield University, Cranfield, Bedfordshire MK43 0AL, UK
Abstract Foresight is an elusive and oft-misunderstood term. Lacking a widely accepted definition, it is unclear when and whether it refers to a process, to a human attribute or competence, or to a national Foresight programme. This paper argues that foresight has developed largely in isolation to the extensive literature on business strategy. By relating foresight to this literature it can be put into a context with a far larger pool of existing knowledge. This paper relates foresight specifically to the core competence view of strategy. The resultant connections have implications for the process and competence concepts of foresight, national Foresight programmes and the core competence view. 2001 Elsevier Science Ltd. All rights reserved.
1. Introduction During the last decade, foresight has become a popular and fashionable concept. This paper aims to connect that concept to the strategy literature. Journals such as Futures and Foresight witness the growing literature in the field of foresight study. Juxtaposed with this are national Foresight programmes. The UK’s Foresight programme aims to use foresight concepts to inform Government spending priorities, and to shape a national culture of innovation throughout industry. Achieving the second of these aims has been problematic. Throughout its history, the concepts within the UK programme have failed to gain widespread industrial take-up. Industry it seems, fails to grasp the concepts of foresight, while the UK programme is criticised for failing to understand the needs of industry. This paper proposes that the problem stems in part from the manner in which Foresight has developed. The UK Foresight programme has always striven to be industry led. Proponents claim it to be strategic, but it has largely neglected the * Corresponding author. Tel.: +44-1908-655858; fax: +44-1908-655898. E-mail address: [email protected] (E. Major). 0016-3287/01/$ - see front matter 2001 Elsevier Science Ltd. All rights reserved. PII: S 0 0 1 6 - 3 2 8 7 ( 0 0 ) 0 0 0 5 7 - 4
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extensive literature on strategy from which valuable lessons may be learned. The strategy field has a far longer history than foresight, yet there is little crossover between them. The concepts developed to examine, explain, describe and prescribe strategy should be able to contribute to the strategic concept of foresight and to the UK Foresight programme itself. This paper concentrates on building a relationship between foresight and the core competence view of strategy. Core competence has been gaining popularity within the strategy literature concurrently to the growing interest in foresight. Section 2 reviews the foresight concept and the UK Foresight programme. Section 3 looks at the strategy literature, reviewing concepts of strategy in general and the core competence view in particular. Knowledge of foresight in industry was generated by a study into take-up of foresight concepts and the Foresight programme in small companies. This is reported in Section 4. The results and experience of this work allow connections to be drawn out between foresight and core competence. Section 5 shows how foresight can be viewed as a core competence. Section 6 then discusses the implications that follow for the foresight concept, the UK Foresight programme and the concept of core competence.
2. The concept of foresight and the UK Foresight programme Foresight principles are generally considered to have first gained popular use in Japan, where the Government has conducted national programmes approximately every 5 years since 1971. These have been instruments to look systematically into the long-term future. Their aim has been to identify areas of strategic research and generic technologies most likely to yield the greatest economic and social benefits [1]. The Japanese experience is considered as one reason for that country’s post-war global competitive success, and has heavily influenced national Foresight programmes in other countries. A complex relationship exists between foresight as a field of study and national Foresight programmes. Growth of the field has accompanied adoption of national programmes. The UK Foresight programme has been heavily influenced by foresight study. Many foresight practitioners in both academia and industry were consulted and continue to be involved. The Foresight programme has in turn contributed to the foresight field, not least by broadcasting and popularising the concept. 2.1. The concept of foresight “Foresight” is an elusive term having different meanings to different people. Slaughter presents a comprehensive study of the foresight principle. He considers that: Foresight is not the ability to predict the future…It is a human attribute that allows us to weigh up pros and cons, to evaluate different courses of action and
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to invest possible futures on every level with enough reality and meaning to use them as decision making aids…The simplest possible definition [of foresight] is: opening to the future with every means at our disposal, developing views of future options, and then choosing between them [2] (p. 1). According to Slaughter, foresight is an attribute, or a competence; it is a process that attempts to broaden the boundaries of perception in four ways [2] (p. 48): 앫 By assessing the implications of present actions, decisions, etc. (consequent assessment); 앫 By detecting and avoiding problems before they occur (early warning and guidance); 앫 By considering the present implications of possible future events (pro-active strategy formulation); 앫 By envisioning aspects of desired futures (normative scenarios) Normative scenarios move foresight beyond guidance into proactive consideration of desired futures. Scenarios are pictures (mental representations) of possible future situations designed to help organisations to make decisions in the present. Scenario building is a common theme in foresight study. The Small Business Foresight unit at Durham University Business School uses scenarios to help small businesses formulate their own visions of the future [3,4]. Latterly, the utility of scenario building has been recognised in the UK Foresight programme [5]. Horton discusses the elements that should constitute a successful foresight process. Successful foresight, she argues entails three consecutive phases: Phase one comprises the collection, collation and summarisation of available information…and results in the production of foresight knowledge. Phase two comprises the translation and interpretation of this knowledge to produce an understanding of its implications for the future from the specific point of view of a particular organisation. Phase three comprises the assimilation and evaluation of this understanding to produce a commitment to action in a particular organisation [6] (p. 6). Horton contends that translation and interpretation is the most critical phase [it is “what foresight is all about” [6] (p. 7)]. She also holds that a foresight process must be carried through to a conclusions phase before its success can be judged. 2.2. The UK Foresight programme The starting point for the UK Foresight programme was a Government white paper on science and technology [7]. This recognised that the nation’s science base was not being reflected by corresponding innovation in industry. Foresight was proposed as an initiative to address the problem. The Foresight programme:
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is a “meta-level” programme…designed to provide an overall direction to and justification for science and technology policy. It seeks to co-ordinate research and innovation agendas across public and private organisations, industrial and service sectors, and academic disciplines by developing new alliances between the producers and consumers of knowledge [8] (p. 528). Foresight’s aims were, and are, grand in scale: The Foresight programme aims to create sustainable competitive advantage and enhance the quality of life, by bringing together business, the science base and Government to identify and respond to emerging opportunities in markets and technologies…Foresight is about creating a culture change in the way the UK approaches the future [9]. The main methodology was to establish panels of expert personnel to identify market, product and technology trends underlying the Foresight aim. Since the panels’ initial reports [10], the DTI and the Office of Science and Technology have produced a series of documents with the aim of disseminating the Foresight findings and the Foresight culture to a wider audience. Dissemination is aimed to reach: …beyond the scientific and technological functions in businesses to key decision makers and opinion formers in functions such as corporate strategy, marketing and finance [11] (p. 12). Following the Japanese experience, reconstituted Foresight panels started a second major Foresight exercise in 1999, 5 years after the first [12]. The UK Foresight programme has drawn extensive comment from both academics and industrialists. It has been criticised for the influence of short-term political pressures while at the same time being commended for its potential and for its long-term aims [13,14]. According to the Royal Society [15] the increased networking within and between academia, industry and Government, rather than any specific outputs, was the major benefit from the early stages.
3. The strategy literature and the core competence view of strategy The study of business strategy predates foresight by a long way. The concept of foresight has been studied in relative isolation. The UK Foresight programme especially has neglected the vast literature available in the field of business strategy. As an established discipline, strategy theory has progressed through development of models and frameworks. This section briefly reviews several important models, showing the development of theory, before considering the core competence view in greater depth.
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3.1. Models of strategy Teece et al. [16] assess several of the more important and relevant models of strategy. Through the 1980s the dominant model was the competitive forces approach [17]. In this model firms use strategy to relate to their environment. The key aspect is the industry or industries in which a firm competes. The inherent profit potential of an industry is determined by five industry level forces — barriers to entry, threat of substitution, bargaining power of buyers, bargaining power of suppliers and rivalry among incumbent firms. The strategic conflict approach [18] emphasises one of the five forces while giving a broader view to the firm’s environment. This is a conflict-based approach; rivalry and interaction between firms is the central theme. Firms make moves that influence the behaviour of rivals and therefore of the market environment, such as investment in new capacity [19] or in advertising [20]. Environment in this model goes beyond the firm’s industry to comprise all factors that influence market outcomes. The competitive forces and strategic conflict approaches are market-based views. Firms formulate strategy to develop a fit with their environment, the key determinant factor of which is the market, or industry. 3.2. Development of the core competence view The competitive forces and strategic conflict approaches emphasise forces external to the firm (i.e. the market). The resource-based approach is a firm rather than industry-centred view. Firms’ resources are the central considerations and the primary constraints by which they can formulate and frame their strategy [21]. Supporting the primacy of firm-specific factors, a study by Rumelt [22] showed that profit differences within industries exceeded those between industries. The resource-based approach regards competitive advantage to lie in internal, firm specific resources such as lower costs or higher quality [16]. Resources themselves can be considered to be generic, equally available to all. Consequently, competitive advantage accrues from the way in which resources are bundled together. Whereas in the strategic conflict approach advantages accrue to firms from the intellectual ability of their managers [16], in the resource-based approach management abilities are part of the firms’ resource base. The resource-based view holds competitive advantage to lie in a unique mix of the firm’s resources, that is, upstream of their products. The core competence view of strategy takes this logic further; competitive advantage accrues from a firm’s competencies. Competencies lie behind a firm’s ability to bundle together generic resources into a competitive advantage. Prahalad and Hamel, in giving a practitioner’s guide, define core competencies as the collective learning in the organisation, especially how to co-ordinate diverse production skills and integrate multiple streams of technologies [23] (p. 80). Hamel [24] describes five key characteristics of core competencies. Firstly they are an integration (or a “unique mix” [25]) of constituent skills and technologies. They are unlikely to reside in a single individual, deriving rather from the combi-
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nation of individuals’ abilities and firms’ systems. Secondly they are knowledge rather than asset based; they are an activity, a result of learning. Thirdly they have customer value; they are “the skills which enable a firm to deliver a fundamental customer benefit” [24] (p. 13). Fourthly they are competitively unique; to be core the firm must hold a sufficiently superior competence over its competitors (they must be hard to imitate). Finally, core competencies should provide a gateway into new markets; the firm must be able to envision new product markets that can arise from them. The core competence view has become a popular concept. Yet, like foresight, a clear conceptualisation of the term, and an overall integration of various authors’ contributions remain elusive [26,27]. Some authors (e.g. [26,27]) have therefore tended to use the term competence rather than core competence, or to use the two terms interchangeably. In attempting a conceptualisation, Sanchez et al. define competence as:
an ability to sustain the co-ordinated deployment of assets in a way that helps a firm achieve its goals [26] (p. 8).
They hold that for a firm activity to be a competence it must meet the conditions of organisation, intention and goal attainment [26]. A conceptualisation of what makes a competence core can be derived from the result of its use; for the competencies of a firm to be core they must provide it with a competitive advantage. While the core competence view became popular during the 1990s, its development can be seen in older works. The resource-based approach on which it draws can be traced to the work of Penrose [28]. Hofer and Schendel reflect both resourcebased and core competence views: They propose that assessment of a firm’s “unique resource deployments (or distinctive competencies)” is an appropriate criterion for determining which industry it should enter [29] (p. 151). This they argue, is a superior criterion to using some measure of industry attractiveness (as in the competitive forces approach). The industry based models have an outward focus, while the resource based view might be too inwardly focused [30]. In going beyond (or rather beneath) firms’ resources, the core competence view potentially gives a more balanced approach. Few authors within the core competence literature specify particular competencies. Breaking with this tendency, Turner and Crawford [31] distinguish 11 competencies, described by their concepts and by what they enable the holding organisation to do. Competencies specified are performance management, resource application, motivating and enthusing, integration of effort, enaction, communication, commitment formation, pathfinding, development, systems/process engineering and option management. A firm’s competence in each of these areas influences the strategies it can formulate. The competencies described by Turner and Crawford are generic; like resources, they are in principle equally accessible to all. Where a competence gives the holding firm a competitive advantage it is a core competence of that firm. These generic competencies will be returned to in Section 5.
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4. Empirical fieldwork This section reports on fieldwork that was undertaken as part of a major research study into foresight concepts and the UK Foresight programme [32,33]. The research study started from recognition that the Foresight programme was failing to reach small companies in significant numbers [14]. While it has achieved much in terms of its use to inform Government spending decisions and in popularising the foresight concept, the programme has failed to reach sufficiently into industry to enact any significant cultural change. Further efforts at improving dissemination have had little overall impact on firms’ Foresight awareness, and even less in changed firm behaviour1. The study examined take-up of the Foresight programme and foresight concepts in small companies, setting out ways in which small companies might increase their openness to the Foresight programme and foresight concepts, and thus more readily take on a foresight culture. The centre of the research was a programme of interviews with managers in small companies. Forty-nine companies were sampled, 27 from the specialist organic chemicals sector and 22 from the electronic sensors sector. The criteria for selecting sectors were that they should be technologically progressive, highlighted as priority areas by the Foresight programme, be accessible for research, form discrete samples and come with recommendation of informed personnel. These interviews were supported by discussions with personnel in research associations, innovation centres and industry associations, and with people involved in foresight research and the Foresight programme. Information was sought on the general question of how small companies learn about and acquire new knowledge. More specifically the survey assessed their knowledge and use of the Foresight programme and of the process and human attribute/competence (as in Slaughter) concepts of foresight. The fieldwork findings were coded and analysed in four streams. The relevant outcomes from this process are discussed in the following subsections. The four streams were: knowledge and use of foresight concepts and the Foresight programme; reliance on the supply chain for acquisition of new knowledge; use of the business support community for acquisition of new knowledge; and the importance for new knowledge acquisition of interpersonal networking. 4.1. Foresight concepts and the foresight programme Initial questions gauged sampled companies’ awareness and perception of foresight concepts and the UK Foresight programme. Further questions assessed how companies have responded to their foresight knowledge, and what impact it has had on them. Foresight knowledge was higher than expected in the specialist organic chemicals sample, but lower in the electronic sensors sample. Almost half of the chemicals sample held a working knowledge of the Foresight programme (i.e. a gen-
1
There is a lack of clearly documented evidence to formally back-up this widely acknowledged assertion. Industrialists, academics, foresight practitioners and Government personnel directing foresight policy all recognise this state of affairs.
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eral knowledge of Foresight ideas and publications). Only five had no knowledge of the programme, while six held extensive and up to date knowledge. By contrast, only two sensors companies held any working knowledge of the Foresight programme. As expected the Foresight programme was found to have had little overall impact. Some companies were taking notice, but most impacts were second order at best. The most important finding was the existence of a discrete four-company subgroup within the chemicals sample. These respondents claimed to use the foresight concept as a regular part of their business. All four claimed the practice to predate their knowledge of the Foresight programme. The programme’s contribution has been a validation of their existing practices. Indeed, three have been giving the benefit of their own foresight experience to the Foresight programme through direct involvement of company personnel. These four companies already have the foresight culture that the programme aims to build. In all four the outwardly focused personal attitudes and knowledge of staff are vital to their foresight culture. These companies are henceforth referred to as the foresighting group. No sensors companies entered the foresighting group. However, changes were being initiated in three further chemicals companies and one sensors company that might move them towards a foresight culture. The impact of the Foresight programme on this second subgroup is again confirmatory, validating the need for the changes that are already underway. This second group of companies are henceforth referred to as the intermediate group. 4.2. Reliance on the supply chain Previous research has shown that customers and suppliers are always the most extensive contacts that a company has [34,35]. The interviews sought to establish how far small companies’ supply chains are used for the acquisition of new knowledge. The general finding from both samples was that supply chains are more important knowledge sources than companies’ use of foresight. However the foresighting group all reported low use of supply chains as a knowledge source. Conversely, the companies with the lowest foresight knowledge tended to report high use of the supply chain as a knowledge source. The tentative conclusion is that companies with a greater foresight orientation to their culture make less use of the supply chain for knowledge acquisition. 4.3. Use of the business support community Outside organisations provide another potential source of new knowledge. The business support community constitutes a large group of outside bodies. It includes business agencies such as Business Links and Training and Enterprise Councils, trade and professional bodies, research associations, universities and consultants. All of these can play an intermediary role, increasing accessibility of new knowledge to their company contacts. The research therefore investigated interactions between sample companies and intermediaries, analysing the levels to which they are used for acquisition of new knowledge. Some companies were found to have extensive
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intermediary contacts, while others had very few. However, rather than overall use of intermediaries, the most important finding concerned the pattern of that use. Some sampled companies were found to have homogenous, moderate level contacts with a large number of different intermediary bodies. Other companies had heterogeneous contacts, deep and extensive interactions with a few bodies, but only cursory contacts with others. Comparing this finding with companies’ foresight knowledge shows that the companies with the most heterogeneous intermediary interactions were those comprising the foresighting group. In contrast, companies with the most homogeneous intermediary interactions had low foresight knowledge. Intermediary interactions for the intermediate group were more homogeneous than for the foresighting subgroup, but less than for the lower companies. 4.4. Importance of interpersonal networking The final analysis stream looked at the personal networking that goes on between company personnel and people in outside organisations (e.g. in suppliers, customers, competitors and intermediaries). All companies network with outside personnel, using a whole range of methods from the rigidly formal to the very informal. To what extent are these networks used for new knowledge acquisition? The research found that, on average, networking is of approximately the same order of importance to the sampled companies as is their reliance on the supply chain. However, there is an inverse relationship between the two streams. As a guide, companies making the most extensive use of networking for knowledge acquisition tend to place lower reliance on the supply chain. Networking thus also tends to follow positive trends with foresight knowledge and heterogeneous intermediary interactions. A second finding is that knowledge acquisition derives more easily from informal networks than from rigidly formal networks. 4.5. Multi-stream analysis Relationships are apparent among the four streams of analysis. The four streams are indicators of a company’s overall managerial attitude to the future. Looked at together, the streams give a picture of the characteristics of managerial attitudes in small companies. Knowledge and use of foresight, heterogeneous use of the business support community and the importance of networking for knowledge acquisition were found to follow a positive general trend with regard to one another. Conversely, greater use of the supply chain as a knowledge source generally accompanied lower results in the other streams. The companies can be distinguished according to three broad types of managerial attitude. The first type is represented by the foresighting group. These are characterised by their high foresight knowledge and use of foresight practices, highly heterogeneous use of intermediary organisations, extensive external networking and low reliance on the supply chain. At the other extreme are companies with no or very low foresight knowledge and no use of foresight practice, homogeneous use of intermediaries, low use of external networking and high reliance on the supply chain. The intermediate group exhibit intermediate characteristics in all
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four streams. Managerial attitude may be described as strategic for the foresighting group, responsive for the intermediate group and reactive for the lowest group. Fig. 1 illustrates these findings. The strategic, foresighting companies all exhibit coherent characteristics. Each characteristic is reversed for the reactive group and present at intermediate levels within the responsive group. These four characteristics are therefore considered significant indicators of a company’s managerial attitude to the future, and of the proximity of that attitude to the foresight culture.
5. Foresight and the core competence view of strategy 5.1. The role of the individual The four-stream analysis reported in Section 4 places strong emphasis on the role of individual managers. The impact of managerial attitudes and attributes is central. Even in the foresighting companies their foresight knowledge was attributed to individual staff rather than to company systems or procedures. Accumulation of foresight knowledge and a company’s use of foresight concepts build primarily on the proclivity of one manager or a small management group. In two of the four identified
Fig. 1.
Characteristics of managerial attitudes in small companies.
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foresighting companies a single leader (the chairman in one, the technical director in the second) is the stimulus for the companies’ foresight inclinations. A third company was set up by a group of four managers collectively holding a propensity for foresight. The four intermediate companies in the sample are enacting changes moving them towards a foresight culture. In two of these appointment of a new chief executive with strong foresight inclinations was the opening step. Interactions with the business support community are similarly affected. Managers’ inclinations to look for solutions outside of the company lead their company into more extensive use of intermediaries. Networking is even more strongly influenced by individual inclinations. Informal networking, so useful for acquiring new knowledge, comes naturally to strategic, outwardly focused managers. The leaders of reactive companies are focused much more on their companies’ immediate environment. Lacking the inclination to look to outside sources, they rely on their existing systems and contacts. The result is dependence on their supply chains. Further evidence for the individuality of small companies comes from discussions with business support agencies and research associations. These organisations do not distinguish groupings of small companies. When formulating their offerings, they take one of two approaches: the broad method is to offer a standard, undifferentiated service to all prospective clients. The alternative is to deal with each on an individual basis. Both approaches recognise that small companies are all vastly different, the first implicitly, the second explicitly. 5.2. Foresight and core competence Consideration of individuals’ importance and proclivities returns thoughts to the discussion of strategy and core competence. From the strategy literature, Teece et al. [16] hold that firms’ advantages ultimately accrue to the intellectual ability of managers. The abilities, attitudes and attributes of company managers are central to the core competence view of strategy. Managers’ proclivities are part of the “collective learning in the organisation” [23]. The critical element underlying foresight is thus also a critical element of core competence. Turner and Crawford’s 11 competencies were listed in Section 3.2. Among their list is the competence of pathfinding. This they describe as follows: [Pathfinding] is the corporate competence to identify, crystallise and articulate achievable new directions for the firm. Part of the competence stems from an outward and future orientation of the firm’s members and the intelligent use of systems and processes that empower this. Environmental scanning systems; strategic planning exercises; processes which collect competitor and market information in a systematic and disciplined way; involvement in trade and research groupings that are concerned with corporate or national development; all foster widespread involvement in opportunity seeking and the crystallisation of informed views about new directions. Forums for discussions, with different and sometimes overlapping membership, help to sustain this competence.
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Pathfinding involves a mixture of search and creativity. It also depends on selfknowledge and an understanding of the transformability of the firm’s own assets, i.e. the degree to which it can practically apply or mould them to other uses. The paths that search reveals are only relevant to the extent that the organisation is able to exploit them. This, in turn, depends to some degree on creativity in finding ways to exploit or reconfigure possibilities. This competence impacts on future performance [31] (p. 253). This could almost have been written as a description of foresight. It parallels much of the concept of foresight, of the UK Foresight programme and of the fieldwork findings. The foresight concept is about “opening to the future…[weighing] up pros and cons, [evaluating] different courses of action and [investing in] possible futures” [2] (p. 1). The result of this foresight is “[identification, crystallisation and articulation] of achievable new directions for the firm”. Pathfinding stems from an “outward orientation of the firm’s members”. Fieldwork showed outward-orientation to be the critical element in a foresighting company. Outward-focused management inclinations underlie the “systems and processes” that a pathfinding firm uses. Environmental scanning, strategic planning and collection of competitor and market information are all activities of an outward-looking, foresighting company. They are all part of Horton’s first phase (collection, collation and summarisation) of successful foresight [6]. The UK Foresight programme carried out environmental scanning, strategic planning and information collection processes in a centrally co-ordinated manner. Involvement with “trade and research groupings” helps to crystallise “informed views” for pathfinding. The fieldwork identified greater interaction with these intermediary bodies as an indicator of a firm’s outward focus and foresight culture. Similarly, “forums for discussion [that] help to sustain this competence” are indicative of a propensity for networking. Pathfinding involves “search and creativity” and “self-knowledge”, all of which begin with the individual. “Transformability of assets” is less explicit within foresight than pathfinding. Discussions of foresight and manager ability do however bring to mind that management ability should be considered among a firm’s assets, as in the resource-based view of strategy. Pathfinding requires “creativity [to] exploit or reconfigure possibilities”. Creativity also starts with individuals. It recalls Horton’s second phase of successful foresight, translation and interpretation [6]. Turner and Crawford themselves later suggest that a firm’s pathfinding competence often relies on “the personal competence of a CEO or a few key appointees” [31] (p. 261). Such competencies may be imported into the firm [31], as with the appointment in two of the sampled intermediate companies of new chief executives with strong foresight inclinations. The final element of Turner and Crawford’s description of pathfinding is the fundamental outcome both of successful foresight for an individual organisation and of the UK Foresight programme for the nation; “[impact] on future performance”. It is clear that foresight, as elucidated by the fieldwork presented in Section 4, has a great deal in common with the competence of pathfinding. Indeed, given the above descriptions, it is difficult to see any fundamental difference. This paper contends that foresight and Turner and Crawford’s competence of pathfinding are
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describing the same fundamental concept. The major differences between foresight and pathfinding lie in their comparative states of development. Both foresight and the core competence view of strategy gained recognition during the 1990s. There is only limited research on any individual example of a core competence, as the core competence literature is more concerned with enabling managers to identify idiosyncratic competencies of their own firms. There have been few attempts to formulate generic competencies, as Turner and Crawford do. As a result the concept of foresight has been far more extensively researched than that of pathfinding. However foresight’s connections with pathfinding, with core competence, and more fundamentally with the strategy literature, have not been clearly made. In expressing the equivalence between foresight and pathfinding, this paper contends that foresight is a competence. Where it underpins a firm’s competitive advantage foresight is a core competence. To maintain this assertion it must be shown that foresight fulfils all of the characteristics of a core competence, identified earlier. Table 1 lists these characteristics and shows how foresight fulfils them. Core competencies were first defined as an integration of skills and technologies. Foresight has been shown to reside initially in individual managers. Even where foresighting expertise relies on a single person the activity of bringing that expertise into the firm requires integrated teams. Successful foresight identifies and exploits new opportunities. Successful exploitation of opportunities from new technologies requires integration of those technologies with the firms’ existing skills and technologies. It is from this integration of individuals’ foresight competence with firms’ skills and technologies that a foresight culture can develop. Core competencies are knowledge based rather than asset based. Foresight is an activity, dependent on tacit knowledge rather than on the firm’s physical assets. Core competencies have customer value. Foresight extends the customer value of the firm’s offerings into the future. Core competencies are competitively unique. Foresight enables firms to build competitive advantage for the future. It allows a firm to sustain its competitive position by enabling it to revise or replace declining products more effectively than competitors. Core competencies must be difficult to imitate. Foresight initially comes to firms from individuals, but it is operationalised through the formation of systemic processes and practices within the firm. Only the surface practices may be visible from outside, and therefore imitable. Systemic and tacit knowledge are hard to imitate. It is through Table 1 Core competence and Foresight characteristics Core competencies
Foresight
Integration of skills and technologies Knowledge based Customer value Competitively unique Difficult to imitate Gateway to new markets
Resides in individuals and teams Depends on tacit knowledge Extends to future benefits Enables the building of competitive advantage Based on systems and tacit knowledge Helps to identify new opportunities
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integration of individual expertise with systems that firms benefit from foresight. Even where firms acquire the individual expertise through acquiring foresight inclined people it will take time to emplace the systems. Finally core competencies should provide a gateway to new markets. Foresight inherently provides such entry. Identification and exploitation of new opportunities is both an outcome of applying the foresight concept and one of the aims of the UK Foresight programme.
6. Implications of viewing foresight as a core competence Section 5 has shown how the concept of foresight can be seen as a core competence. All of the recognised characteristics of a core competence are fulfilled. Viewing foresight as a core competence has significant implications. 6.1. Implications for the foresight concept and the UK Foresight Programme Foresight has been an elusive concept, difficult to grasp and define. Extensive literature on the foresight concept and the Foresight programme has failed to clarify its meaning. Core competence, being within the field of business strategy, has a clear context in which to be viewed. Core competence can be compared with other strategy theories and its historic development traced. Its placement in a well-established academic and business discipline gives clear reference points for its study. Foresight lacks the reference points of an existing, established discipline. Viewing foresight as a core competence puts it into a context. Establishing relations between foresight and strategy makes the whole of the strategy literature available as a context for the study of foresight. The UK Foresight programme, in its efforts to be industry driven and politically acceptable, is particularly guilty of running in isolation. Showing the connection between foresight and the strategy discipline also places the Foresight programme into a strong context. The core competence literature strives to make strategy relevant and accessible to companies. Like the Foresight programme, the competence writers are trying to encourage a new industry culture. Their aim is to enable industry “to rethink the concept of the corporation itself” [23] (p. 79). Significant implications follow from understanding foresight as a core competence and accessing the core competence literature. Dissemination of the Foresight programme findings and the foresight culture should become far more effective. Presenting foresight as something to help firms build up a vital core competence will make it much more relevant to industry. The implications of viewing foresight as a core competence thus have benefits for industry. Viewing foresight as a core competence aids the study of international business. Nations as well as firms can hold core competencies. Studying national competencies fosters understanding of the effects of national cultural differences on business. The core competence of foresight is held by Japan. The Japanese have been building it for thirty years through their ongoing national Foresight programmes.
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6.2. Implications for core competence and the strategy literature The strategy discipline and the core competence view also benefit from the link to foresight. As shown in Section 5.2, there is little extant research on individual core competencies. Foresight stands as an example of a well-researched core competence. It gives extended treatment to the identified core competence of pathfinding. Foresight research shows how the constituent elements of an individual core competence can be identified. It shows how a core competence can be emplaced, nurtured and sustained. National Foresight programmes show how a centrally co-ordinated scheme can impact upon the core competencies of firms and of nations. Connecting foresight to core competence adds a new field of study to the strategy discipline. The foresight literature is expanding. National Foresight programmes have been started in numerous industrial and industrialising countries [36]. The strategy discipline is thus connecting to what has become a very fashionable field of study. 6.3. Implications for future research The purpose of this paper has been to make explicit the connections between existing strands of research, rather than to highlight a need for new research. Nevertheless, developing the idea of the core competence of foresight has raised several fundamental areas that may benefit from future work. Most basically, future research into foresight, and the UK Foresight programme, could benefit from being carried out within the context of core competence and the strategy literature. Secondly, future foresight work could benefit from crossovers with other strands of the strategy literature. Pioneering work by Hamel and Prahalad [37] begins to address the issues raised. From a grounding in strategy they present a treatise on the need for firms and industries to compete for their future, not just for their present or past. Industry foresight, according to Hamel and Prahalad, addresses the critical questions of the future customer benefits to be offered, the new competencies required to offer those benefits and the new customer interface required to supply those benefits. Hamel and Prahalad do not make reference to national Foresight programmes. Neither do they refer to the foresight literature, or to foresight as a process or attribute. Hamel and Prahalad point the way forward for future work. Interdisciplinary research that includes both strategy and futures/foresight perspectives is needed to strengthen the foresight-strategy link. This paper has shown the building blocks for emplacing the core competence of foresight — through the integration of individuals’ expertise with firms’ systems. It has left unanswered the question of how individuals’ foresight inclinations are transferred into firms’ foresighting systems, and into core competencies; i.e. how individuals’ foresight competence gives rise to an organisational foresight culture. This could be addressed by future research to strengthen the theoretical and conceptual bases of the competence of foresight/pathfinding. A connection could be built here with the literature on organisational learning (e.g. [38,39]). Lastly it was suggested above that Japan holds the core competence of foresight. Core competencies held at the national level are part of the national culture. Differences between countries’
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core competencies could go far in explaining differences in their business cultures. Further cross-disciplinary study is suggested. Research into national core competencies could be heavily informed by cultural studies within the anthropology discipline.
7. Conclusions This paper has argued that the foresight concept, and the UK’s national Foresight programme in particular, has been handicapped by its minimal interaction with the strategy literature. By reviewing foresight in conjunction with the strategy literature, it has been possible to show that foresight can be thought of as a core competence. The study into foresight in small companies, reported in Section 4, revealed some of the indicators of forward focused, foresightful companies. From this was highlighted the critical importance of the tacit knowledge of individual managers. This study allowed foresight to be compared to the core competence view of strategy. The result is the central contention of this paper: that the concept of foresight and the core competence of pathfinding are describing the same fundamental concept.
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