New Book Review: "Future Value Generation"
New book review for Future Value Generation: Do You Need to Create New Business Logics?, by Daniel Egger, CreateSpace, 2016, reposted here:
Copy provided by author Daniel Egger.
According to Egger, most companies today strive to react with quick solutions when challenged by change, and at the same time, strive to design new opportunities for the future. Unfortunately, however, companies get disappointing results because (1) innovation merely attempts to solve past problems, (2) strategy locks in a static worldview, and (3) foresight too often explores what is possible, but not practical. In order to create new value (which the author refers to as "logic"), the author argues that companies instead need to integrate these three approaches.
In his introductory pages, Egger explains that organizations will lag if they do not add new competencies and new methods to prepare for change. "If they try to meet new challenges using the reasoning, arguments, and hypothesis of the past, they might solve the problem, but it will take increasingly more time. Without new organizational capabilities, they have less and less time to adapt these new challenges, which will increase in quantity and complexity. Urgent action is critical."
"If the organization is inactive, cultural distress builds up, leading to managing daily crises and fast, super-simplified decision making, a tactical response that cannibalizes mid- and long-term value generation. This way of responding to change drives the organization into constant waves of disorder, causing it to forget about creating purpose and exploring new opportunities that emerge. Interesting is that a focus on crisis management might save the day but will only postpone critical business decisions."
"The strategic relevancy for exploring the necessary changes to business logics and understanding the ongoing shifts only increases with time. A proactive attitude to the future is necessary. It leads to a higher level of agility and adaptation of the business logic to external change. Understanding the future means preparing strategic alternatives and counter-attacks before they are needed. By setting such a course, organizations identify risk and transform complexity into opportunity. We have to unlearn the old, and be open to and prepare for the new, not as a leadership development dogma, but as a strategic necessity, even if this demands hard decisions."
This book is broken down into 3 chapters. The first chapter lays the groundwork for value generation, and along the way explores the connections between change, opportunity, and design, as well as the importance that each brings to creating new business logics. The second chapter is dedicated to case studies, and the third chapter explores the integration of innovation, foresight, and strategy in order to make the organization more agile, facilitate decision making, and create new future value.
As an individual who has read extensively about innovation and strategy, the 6 pages that conclude the first chapter personally provided the most value to me. The bulk of these pages discuss the types of futures that exist: (1) possible futures, (2) plausible futures, (3) probable futures, and (4) preferred futures. While the author provides a well constructed table that describes each of these types of futures, the names of each are fairly self-descriptive.
As a consultant architect, it has always been interesting to see most clients focus on preferred futures: What do we want to happen? What makes sense for the clients and us? What advantage do we expect? At the opposite end of the spectrum, however, are the possible futures: What can we imagine will happen? What is the most revolutionary change? What could happen, but sounds strange? While the vast majority of firms cannot afford to spend resources to explore possible futures, most firms should invest in the exploration of plausible and probable futures.
While I personally do not typically benefit from reading more than a few case studies in a particular subject area, a majority of the dog ears that I created while reading this book were concentrated in the third chapter, so I know that the author has presented content here that I will plan to revisit in the future. One section of this chapter was especially interesting to me, because it addresses a type of future not included in the original four: the official future. Egger describes the official future as the set of underlying past assumptions, the "entrained thinking" of executives and influencers. In revisiting my earlier comment that preferred futures have typically been the focus of my clients, it is not a stretch to say that there is probably often overlap with the official futures in their respective firms.
Egger also walks the reader through the concept of "time ecology". Earlier in my career, I focused on the current state and future state for any given software application or enterprise architecture. As I matured, I came to realize that while there is only one true current state (even though I recognize that such a true current state often does not mesh with the official current state), there are likely many possible future states, some having higher probability than others.
As the author explains, time ecology increases awareness of what change is when in transformation. "Plotting out the shifts and researching their change in direction over time provide organizations with the ability to make better and more risk-aware decisions. A timeline and expansion of the time frame reduces the fallacy of the time perception. The longer view guides us to explore more implications for our business to create a sense of the changes over time." Especially interesting in this discussion is idea of the "backcasting exercise".
While many of the concepts in this book will not be new to many readers, Egger has made a good attempt at integration. That said, many reading this review are likely not to have encountered a number of these concepts in the past. This book is recommended to those falling in this latter group, or those trying to make some sense of how many of the innovation and strategy concepts they have encountered in their respective industries might form a cohesive framework from which to draw for tackling future projects. Even the closing field notes that the author provides on corporate innovation labs (which have often devolved into entities more akin to "innovation theater") provide insight: "Any self-respecting CEO now has a corporate innovation lab!"