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Some managers develop strategy by focusing on problems in the present — and that’s especially true during a crisis.
But Mark Johnson, co-founder of the innovation consulting firm Innosight, argues that leaders should imagine the future and then work backward to build their organization for that new reality.
In this episode, Johnson outlines the practical steps managers can take to look beyond the typical short-term planning horizon and help their teams grasp future opportunities. He also shares real-world examples from Apple, Johnson & Johnson, and Intel of what can happen when leaders shift their strategic mindset to focus on the future.
This episode originally aired on HBR IdeaCast in May 2020. Here it is.
CURT NICKISCH: Welcome to the HBR IdeaCast from Harvard Business Review. I’m Curt Nickisch.
Before we get into the interview, I have a quick request for you. It would be great if you could take a of couple minutes to take our listener survey. It’s at HBR.org/podcastsurvey. As a team we’re just reaching out to get to know you better and to make IdeaCast better for you. It will take just a few minutes of your time, but it really helps us craft a better show.
Even in the best of times, developing the right strategy for your company can be a challenge. You have to worry about the now, while also planning for an uncertain future. And in a time of crisis, picking and sticking to a strategy can be even more overwhelming. The present is all-consuming, and the future is even less clear than before.
Take the current coronavirus pandemic. If you’re in health care, education, retail, or many other industries, the future you had been planning for is not necessarily the one you’re going to face.
Today’s guest says too many leaders, in their strategic decision making, make the mistake of looking at the present as a starting point. And he says, especially now, good leaders should be starting with the future, and working backward. He calls this taking a “future-back” approach rather than a “present-forward” one.
And he’s here to tell us exactly what he means by that. Mark Johnson is a senior partner of the consulting firm Innosight. And he’s a coauthor of the new book Lead from the Future: How to Turn Visionary Thinking into Breakthrough Growth. Mark, thanks for coming on the show.
MARK JOHNSON: Thank you, Curt. It’s great to be here.
CURT NICKISCH: Managers and business leaders right now are encountering lots of change and that is essentially the market sending them lots of signals. And a classic approach would be to respond to those market signals – that’s kind of a present-forward approach. You’re arguing for this futureback approach which is, is it essentially trying to get a sense of what you think the future is going to be and working backwards? And how is that different and more valuable?
MARK JOHNSON: Yes. Well and I think similar to you need management along with leadership, you need to think in a present forward way and in fact it will be 90 percent of your time, 80, 90 percent. But you also need future back. So present-forward is exactly as it sounds which is to really be able to take the existing operations, the way activities work, processes and the way things are organized, dealing with the immediate market needs. Dealing with challenges in the supply chain. Marketing challenges. You know, you name it depending on the different business function.
That needs to still take place and it’s 80 to 90 percent of your effort and along with that is what has to be done in the core operations to reposition to make sure that it remains viable in these difficult times. But what I propose is that there’s carving out, even in this time of crisis, 10 to 20 percent of leadership time to really think out past the two-year, out to the five-year to 10-year horizon, and to think about that from a future back way which really had two pieces.
One is it’s a way of thinking which says we have to break free for the moment from the way things work today and the past so that we can open up our mind to think about the art of the possible. That’s I think what fully unleashes a vision and it would have to be unleashed in the sense of not just saying that this is what we want to try to achieve broadly in our industry, but specifically based on trends and the convergence of those trends and a discussion about that, and other factors deciding what your organization from an enterprise point of view needs to look like in that envisioned future. So you have to do that. You’re giving that opportunity to develop the art of the possible. That’s the thinking mode of future back.
CURT NICKISCH: And is that something you just don’t get from a strategy that’s based on responding to the present?
MARK JOHNSON: Well oftentimes you don’t because the strategies by definition really about where to play, how to win the game. Whereas vision as we define it is also, is really more about, what is the game that you should play in the first place, and being prepared to play a different game.
And you know in the early 1820s and 30s, when the first locomotive was developed, what was behind it was a set of stagecoaches. So, their view about how the technology could be applied to a new paradigm of transportation was to think really in the rearview mirror about the way transportation worked. Of course we know passenger trains quickly developed from there to be something completely different than the stagecoach. And so, what we’re really trying to do is break free.
And strategy unfortunately can, oftentimes not be about breaking free from the past. It can be very financially driven. It can be very much similar to planning, if we’re not careful you know, just a kind of a business planning way. It certainly cannot think about time horizon as much as it should.
So, vision is complimentary with strategy. Vision is getting you out in that five to 10-year horizon of what you could and should be, not just about the way things are today, to seize on those opportunities that can develop well past your core. Strategy is how you get there in terms of the choices you make of where you’re going to play and how you’re going to win within trying to achieve that aspiration, that vision, of what the future of the enterprise could be.
I mean just as a very quick example, and it’s a well-known one in general in terms of Apple and Steve Jobs. But what’s not well understood is that what Apple did, Steve Jobs did – by the way, in the middle of a crisis in 2000 in the dot com crash – is he took his top 100 lieutenants and they looked out 10 years to 2010. And they not only envisioned what the personal computer, a niche personal computer could be, but he with his team envisioned that they could go past the computer. That they could create what they called the “digital hub” to enable all of these up and coming consumer electronic devices to be powered with the microprocessor capability that would come from the personal computer. He announced that to the world. What he didn’t announce was that actually they envisioned a white space and said we can actually get into consumer electronics ourselves. And, of course, we know the history there that music industry and other industries were transformed by Apple’s vision – Steve Jobs and team’s vision – looking 10 years out and then walking that back practically to a strategy.
So, I think we need to build a language and a way of thinking about vision versus strategy and it’s never more important than in a crisis because you can think about the vision as the hope, the purpose and the inspiration that individuals and organizations need to get past these 12 to 24 months. And strategy’s the means to get there.
CURT NICKISCH: Number one, it seems like people would have a really difficult time feeling confident about that kind of, having that kind of a vision, at a time like this, where everyone gets perhaps more risk averse. That seems pretty tough.
MARK JOHNSON: I think you have to have the right perspective – which, if vision is viewed as a somehow you have certainty about this five to 10-year horizon, then it definitely would seem not only overwhelming, but probably ridiculous. And I think that’s partly why the long-term horizon gets such a bad rap and vision can be dismissed as not being practical.
But it’s not really about developing certainty about the future. It’s really about having the opportunity to have a conversation as leaders in a different mindset, in a different mode of learning to talk about the art of the possible and use that as a way to develop a plan to learn. Because I think what is misunderstood is one, this idea that the future that we’re trying to develop with a vision is a photograph. It’s actually an impressionist painting.
So we got to change the mindset. You’re never done with the vision. In fact, you ought to be coming back to it more often in this time of crisis – I even espoused on a weekly basis. Rethinking the vision, evolving it as you learn in the market with initiatives that get tested. How does the vision need to adjust? How are our scenarios playing out?
So, the operative word in all this is learning. And vision is just one component of a process that leadership teams need to amp up their game. And this element of looking out to the five to 10 years, and then walking it back to plant the seeds for today, that’s just all part of the process like an innovation team. To be able to set experiments and figure out what needs to be learned.
CURT NICKISCH: How do you practically do that? Are leaders just reserving 10 to 20 percent of their time to sit in an office and daydream, or bring up things that people have suggested in the past and realized, oh well, this vision made this future that somebody thought we could get into once, that timing may now be here or may be coming. What does that practically look like?
MARK JOHNSON: I think the first is to recognize that sometimes you have to change behavior before you change mindset. And so yes, one thing this is about is making the choice as a team, to say, we’re going to spend some time, 10 percent up to 20 percent of our time, and in the middle of a crisis like this we’d say, the repetition of that is, it’s more frequent – weekly. Spending time in the future.
Now maybe it’s not five to 10 years. Maybe you’re in a software company and it’s going to be four years, or if you’re a pharmaceutical or defense contractor, it could be 15 years. But it’s a further out horizon to start, in order to be able to have these conversations and you know, the conversations are structured. They’re not, it’s not daydreaming, it’s a lot of hard work. It’s being able to take trends, to take where the consumer’s heading, to take points of inflection, you know, how to trends converge?
And think about them coming together and being able to say, what does that mean in terms of the environment and especially where’s the customer going and how can we shape the customer? And using that to define implications, you know, we talk in fact, very practically about implication archetypes. You know, is our business on a trajectory to keep moving onward and upward, mainly with what the core operations and core innovation can do? Or do we see it plateauing? Do we see commoditization setting in and we’re actually going to have what we call a growth gap?
Are there not just this threat of things plateauing and declining, but are there down the road some real opportunities to do things cross industry, or industry transforming where it’s as much about an opportunity that we could see out in the future as it is a threat, and begin to start talking about that?
The example which we went just very deeply in lead from the future is Johnson & Johnson’s Janssen Division, which is their pharmaceutical division, and a great visionary leader named Bill Hait, who was the head of Janssen’s R&D, looking, looking into the future at a time in 2012 when Janssen was very, very successful, and it is still successful, you know, overseeing a very, almost $10 billion budget of R&D, but as an oncologist by training, looked and said you know, we can look out to 2030 and see, see a vision of where we not just are in a break fix mode of disease, fixing diseases or treating diseases, but we can actually look to intercept and to prevent disease. Because we can see the convergence of life sciences with biomedical devices, with the ability to monitor and have biosensors, and a whole set of things converging together to where we could begin – that group could begin to see that diseases like lung cancer, or colon cancer could be intercepted well before they manifest into a stage 1, 2, 3 or 4 cancer.
They were able to convert a vision that was developed in their case, over 15 years out, to a set of choices that are actually taking place today. That as you can imagine are highly disruptive to a pharmaceutical company which has a business model around the development of therapies, of actual drugs that treat versus trying to figure out, you know, how do you make money? How do you develop things that prevent problems happening in the first place has taken a lot of work and continues too/ But without that future back approach, it would be very, very difficult to get past all of the challenges and realities of the day to day business model of a pharmaceutical company.
CURT NICKISCH: So, if I can apply this a little bit to say the owner of a store, a food market or some other essential kind of service like that. You can communicate to your team, we are here to help people, but then also thinking ahead to OK, what are our customers going to want in the future? Do we have to change our plans for how we’re expanding into certain places? The architecture of the new store that we’re building – how are we going to do that differently based off of what we’re learning today? Responding to the current situation and keeping a mission and vision that’s the same, but looking at the data and imagining how the future is going to be and trying to work yourself to that?
MARK JOHNSON: Yes. And thinking about it, Curt, as it’s not a one and done. It’s about carving out this time. Spend a little bit of time in the future, being able to think about how things could be different and where opportunities will arise. And what are those changes like in the grocery store example to adjust the business model, to keep it viable as it looks to get past the post-Covid crisis.
And think of it as three pieces coming together. Maybe that vision gets set pretty quickly, but it just confirms the direction we’re going to head and we’re not going to over index to something that’s not where we really want to head. That’s part one. Part two is to embrace the right way this uncertainty through developing how we’re going to address things over the next 12 to 24 months with scenarios.
But then the third piece, and where it all comes down to anything around vision or strategy or planning, is the choices you make. The resources you allocate in terms of leadership time, bandwidth, dollars and people. And using that to say, we have to learn certain things and we have to experiment and that’s where we’re making choices of dollars and people to be able to, in this high degree of uncertainty, start to move forward.
But if you don’t carve out how to think about things down the road, then I think you end up in this problem of what we call the “present-forward fallacy.” A great example here would be executive education or other forms of higher education. Yes, they could be dealing with how do they address what’s going to happen in the fall, but what about thinking about what is the role of online and virtual learning that maybe they hadn’t thought as much about? How do things just have to be organized in a world where social distancing might be here for the long term?
CURT NICKISCH: Yeah, let’s play that scenario out a little bit. I think online education is one of those things that people have seen coming for a long time and of course there’s a lot out there. And universities, higher education institutions, everywhere have spent a ton of time thinking about that world. Now all of a sudden, the trajectory to reach that just seems a lot shorter, certainly a lot steeper right? So, if you are an administrator, what should you be doing now?
MARK JOHNSON: Well, again I think, I think especially for the purposes of those that support higher education or a specific institution, you need to think about again, how would you have discussions about what is – what stays true to the purpose and the collection of various elements of learning and how you serve the right students and all of that – and do that probably pretty quickly. But that still needs to be there.
But then just as a very practical element, I think these members of faculty and others have to ask themselves, what is, what does the academic year look like, not in 2020, but in 2021? Where does that need to be? Systems would have to be in place, having certain curriculum locked down. How much is a conventional offering versus an online offering? How do you have people trained and hired?
Looking at the scenarios of how things could be at least a year out or more, and then working that backwards, will allow for a better sort of point of view about how things could and should be, that as opposed to just again, incrementing off of today and just if you will, putting people, you know, putting classrooms online.
It’s a little bit equivalent in the early days of the newspaper with the internet. You know, the early days of that was essentially a lot of newspapers just went online, didn’t really change the business model. It almost just looked like a newspaper literally on the internet and didn’t change the whole nature of how media would unfold in terms of advertising and just readership and everything that we know today of how it all evolved.
I think the same thing here. If we’re not careful we’re going to be in a present-forward mentality and not understand that there’s going to be some discontinuities. It’s not going to just be a straight line out to 2021. But it actually could be a transformation. And the best way to deal with transformation is to work from whatever that future needs to be and work backwards.
CURT NICKISCH: Are you in trouble if you’re a business that hasn’t done this already? I mean you could pick any industry and they’re probably organizations in there that have really kind of wracked their brains over some of this already. Other organizations have kind of drifted with the market. So, I’m just wondering if a propensity to wrestle with the future is something that, that helps a company right now, or if you haven’t really done that in the past and you’re being forced to now, are you in trouble?
MARK JOHNSON: Naturally if this is something that’s part of your organization, you have a head start. But it’s never too late to learn. Making that choice to say, we are going to spend 10 percent of our time thinking about the longer term and then the mid-term future. We are going to say, what is it that we need to learn? We are going to be more questions-oriented. We are going to open up in an egalitarian way and debate and discuss, and really try to understand trend lines and what things are going to converge or deal with scenarios and their implications.
So, that you anticipating to use a Wayne Gretzky analogy, not just too where the puck is going, but how you might shape the puck through all of the things that are going to unfold over these next 12 to 24 months and beyond. Again, I think it’s never too late to learn. And it’s never too late, and I’ll give you one other example of this actually, is Satya Nadella in transforming Microsoft of when he took over was in real trouble. The first thing he said basically, one of the first things he said is we need to switch from a culture of know-it-all’s, to learn-it-all’s. It wasn’t too late for Microsoft to change its culture in the way it did things to look further out and to have this mindset that we need to be more focused, not just as leaders, but as the overall organization, to be learn-it-all’s as opposed to know-it-all’s.
CURT NICKISCH: How does this apply to you if you are a regular employee, a lower-level manager, a middle manager? How do you play a part in this – how does this apply to you?
MARK JOHNSON: You know, to use analogy of my, of my colleague who passed away too soon in January, Clayton Christensen, you know, professor at Harvard Business School, and co-founder of Innosight.
And he had a number of folks at Intel who really embraced the theory of disruption and saw that as actually happening, or could happen to Intel. And it sort of developed within the organization at midlevel, with an innovation teams and other places, a common language in a common way to think about the mechanics of disruption and how it applied to Intel.
A long story short is that grassroots effort if you will, started to really inculcate within Intel and it didn’t take long for a very capable visionary leader like Andy Grove to hear what was happening in his organization and to actually embrace it for himself. And then to really drive the thinking, top down, which then ultimately led to Intel coming up with its own version of disruption with the celeron processor to compete against itself, compared to the Pentium chip.
So, I think one is that individuals across the organization can develop a language of thinking future back, within their functions and within major innovation initiatives so that they’re thinking in this clean sheet, careful to not be stuck too much in the present and the past like the stagecoaches behind the new locomotive. That they’re literally walking a process to do that future back. There’s an absolute role that they need to play along with what executive leaders do.
CURT NICKISCH: Mark, thanks so much for coming on the show to talk about this.
MARK JOHNSON: Thank you Curt.
HANNAH BATES: That was Innosight co-founder Mark Johnson in conversation with Curt Nickisch on HBR IdeaCast. Johnson is also co-author of the book Lead from the Future: How to Turn Visionary Thinking into Breakthrough Growth.
We’ll be back next Wednesday with another hand-picked conversation about business strategy from Harvard Business Review. If you found this episode helpful, share it with your friends and colleagues, and follow our show on Apple Podcasts, Spotify, or wherever you get your podcasts. While you’re there, be sure to leave us a review. And when you’re ready for more podcasts, articles, case studies, books, and videos with the world’s top business and management experts, find it all at HBR.org.
This episode was produced by Mary Dooe, Anne Saini, and me, Hannah Bates. Ian Fox is our editor. And special thanks to Maureen Hoch, Rob Eckhardt, Nicole Smith, Erica Truxler, Ramsey Khabbaz, Anne Bartholomew, and you – our listener. See you next week.
