OMG, the CEO had issued a directive to “organise a bit of a workshop” for the senior executive team and some of the board to look at the future direction of the business. The CEO wants to know what the business’ customer will look like in 2022.
This follows a board directive that they think the world has changed since the global financial crisis and that there are now questions as to the long-term direction of the business.
Here’s how just such an exercise might be conducted.
Set aside a half day at an offsite location. Break the time into two sessions: 9.00 am – 10.30 am, then a break, then 11.00 am – 12.30 pm, then lunch where participants discuss the results. The whole process should be facilitated – an employee will be fazed by the seniority in the room.
In the first session facts and information about the organisation are presented. This might involve the CEO delivering a ‘state of the nation’ report for 30 minutes. In the next 45 minutes data is presented to show what the business looked like 10 years earlier.
My view is that it is not possible to look forward to 2022 without first looking back to 2002. What were the business’ key metrics: sales, staff, EBITDA, challenges? What were the issues that confronted the CEO of the day? I would go so far as to interview the former CEO or, at the very least, consult annual reports from this year.
The reason is that the future unfolds by increments and it’s only by leaping back you can appreciate genuinely how the world has changed. In 2002 there were no Chinese and Indian students to speak of. There was a surging demand for seachange product. Treechange had yet to emerge as a residential theme. The market was still unsure about the whole “inner city apartment” thing.
Questions were being asked in 2002 of the future, meaning the balance of the 2000s. Had a forward-looking exercise been done in that year it could well have predicted that the market would gather momentum, that there would be lifestyle/behavioural shifts (seachange, treechange, apartmentia), as well as shifts in ethnicity (Chinese and Indians) and new surges in prosperity (financial services and resources).
The CEO of the day might say that, at that time, they were unsure of future demand, of where interest rates were going and of how to attract the best staff.
By looking back and getting inside the business in 2002, and knowing how things actually unfolded over the next six years (to the GFC), it is possible to see that there was a window of opportunity to grow the business. The CEO at the time may not have fully grasped the opportunity, but clearly, in hindsight, the business should have expanded into new geographies and into new buyer segments.
Spend the final 15 minutes of the first session discussing the current and 2002 markets.
Having completed this fact-finding, backward-looking exercise, the second half of the workshop is all about scoping the future.
What can we say about the market in 2022? Oh, and please do not say that the population of Australia will be 25 million. Boring! What we are looking for here are inflection points – points that depart from the current trajectory.
Table data to show which industries are growing and contracting (healthcare is up; manufacturing is down: strategy may be to target the health sector). Look at which age-cohorts will grow most over the next decade (30-somethings will be up: strategy may be to target affordable housing).
What new infrastructure will change the value of land on the edge of the city? For example, the North West Rail Link in Sydney and the Frankston Bypass in Melbourne will be completed by the end of the decade – we hope. The strategy may be to landbank in Sydney’s North West and on the Mornington Peninsula.
There are no projections of migrant intake by ethnicity, but there has been an inflection from Mediterranean to Asian and Arab influences over the past decade. These trends are likely to continue. What Asian and Arab preferences in housing might be absorbed by the broader market?
Don’t know? Find out! Set out on a whiteboard three blank panels and get the executive team to do the work: ask them to list the attributes of the buyer in 2002 (enlist the help of the former CEO), in 2012 (the current CEO should know this) and then reason what might be the key attributes of the buyer in 2022.
The buyer in 2022 will be an Asian-Arab-Mediterranean-Anglo fusion; the buyer is more likely to be better educated and involved in the services sector; the buyer will be in less stable personal relationships; the buyer may fly-in fly-out or may, in fact, want to work from home.
A future-looking workshop is more than getting the right people in a room and having a bit of a chinwag. Put effort and structure into the day and go through a methodology to take participants back and then forward.
Try it. You will find that it works.
Bernard Salt is a KPMG Partner, an adjunct professor at Curtin University Business School and social editor at The Australian; email@example.com