On the 3 versions of "future" analysis in Strategic Management

Strategic management is future oriented; thus, studying the future facing a company is a key exercise in strategic planning. There are two main planning orientations involved when conducting a "future" analysis. The first orientation is "predict and prepare"; the second orientation is "create a desirable future" (Ackoff, 1981).

The first orientation involves a forecasting effort, e.g. based on extrapolation. In this case, a company can forecast its projected sales, market share and profitability, etc. Once this is done, the company need to prepare for this future, e.g. by adjusting its business model. This planning orientation reflects a fatalistic mindset as the future is itself fixed, and I do not think that companies will adopt this stance rigidly. Nevertheless, based on this planning orientation, a company's main effort is to perform the forecast and, subsequently, to measure the accuracy of the forecast. This forecast describes one version of "future" analysis. [version 1]

The second orientation involves stakeholders' participation to formulate a desirable future so that they can all commit on. In this collective planning process, a company will create a number of scenarios of futures for consideration. In this case, the future is not fixed which is to be gauged with forecasting technology. There is no single version of future facing the company. The future is made up of different possible scenarios, some more desirable than others from the company's perspective. [version 2 of "future" analysis]. A company can choose a future that it desires, though it needs to strive to bring it about. Scenario analysis is itself an important topic in strategic management, see, for example, Fahey and Randell (1998)

Whatever planning orientation a company adopts, it can conduct a PEST analysis and then a micro-environment analysis (e.g. based on Porter's 5-Force model) so as to shed light on the mess it is facing (assuming its existing strategy is to be maintained). The mess is the set of related problems (now and in the future) facing the company if there is no change in its present strategy (Ackoff, 1981). This mess makes up version 3 of "future" analysis [version 3].

All these ideas about "future" analysis have been explained in the strategic management and systems literature. I label them with [...] so that one can see clearly the three main versions of "future" analysis in the management literature. The identification of them is my observation from reading the management literature. The following diagram is a recap of the ideas:

References
Fahey, L. and Randall, R.M. (editors) (1998) Learning from the future, Wiley
Ackoff, R.L. (1981) Creating the corporate future, Wiley