Your Futures Context is Always Longer than Your Planning Horizon

Leaders frequently ask us why they should do foresight work (or strategy, for that matter) if, as "everyone" says, company planning horizons have shrunk to just 1 - 3 years.  Why, they ask, should people spend time looking beyond 3 years?

The answer is: context.  In order to develop either a strategy or a set of activities (or both) for the next year or next 3 years an organization has to account for the context in which it will be operating.  And that context is necessarily broader and longer than the work scoped out in any plan.  That context always includes what might be lurking further down the road and what might approach from the "sides."

If an organization is working on a 1-year plan, then the context for that plan is closer to 3 years.  If it is working on a 3-year plan, then the context is more like 5 - 7 years.  And in each case the range or breadth of issues that reasonably falls within the context for the plan increases as the horizon increases.

Why should we look at things this way?

1. Things Take Time: Looking farther out is important even in an age when so much seems to change so quickly, if for no other reason than most things that will become important to your business still take time to develop.  Whether it is a new technology, an emerging public policy idea, or the growing dissatisfaction of consumers, most things do not simply emerge spontaneously out of thin air, and their development can often be identified early and tracked.  Do not mistake media (blogosphere) hype or triggering events with the longer cycles of maturation.
2. Accounting for Uncertainty: The farther out we look the greater the range of potential issues that will impact your business and, perhaps more important for the current issue, the greater the uncertainty in precisely when something will "pop."  Thus, the longer the time frame for our planned activities, the more "deviation" from our projections we need to consider.  So, if we forecast that something will be mainstream in say, 5 years, then we have to consider that it might actually happen in 4 or take as long as 7 (or more).
3. Good Strategic Thinking: It is not simply what you are going to do or focus on within the next 1 or 3 years that is important, but also how does that position you for what comes next?  Even when your plan is to address things that are critical over a short time horizon, those decisions will position your company for the next set of things that will be developing towards maturity over your 1 or 3 year planning horizon.  Making those near term decisions (typically the "urgent") with an eye to the next set of things (likely the "important") is fundamentally part of good strategic thinking. 

What is a good rule of thumb for identifying your planning horizons?

• If your plan covers the next year, then your horizon should be the next 3 years
• If your plan covers the next 3 years, then your horizon should be 7 years
• If you plan covers the next 5 years, then your horizon should be the next 10