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ASI Real Estate ESG Strategy

Dialling up ESG Integration with Aberdeen Standard Investments

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Hillbreak has advised Aberdeen Standard Investments (ASI) on the development of an enhanced global Real Estate ESG Strategy. This builds on the respective strengths of the approaches to responsible property investment of the ASI heritage organisations, Aberdeen Asset Management and Standard Life Investments, and addresses evolving client expectations and long-term trends that are likely to shape how business is done in the future.Dialling up our integration of ESG into real estate

Our analysis identified several opportunities for ASI to fulfil its ambition of cementing its position as an industry leader on ESG across the full spectrum of its real estate investment management platforms, covering direct, indirect, listed and debt funding activities.

With the visible leadership and strong support of the ASI RE Investment Management Committee (RE IMC) a constant feature of our engagement, the resulting Strategy presents a cogent vision and long-term approach to ESG matters that is firmly embedded within the fund development and execution process.  Outcomes and features of particular note include:

  • An investment-specific approach to materiality, underpinned by a consistent house-wide framework of global drivers of change, with topics ranging from urban air quality to Modern Slavery to affordability.
  • A sophisticated but practical approach to embedding material ESG factors into each stage of the investment process, including underwriting decisions, supported by a unique tool, the ESG Impact Dial. The ESG Impact Dial supports strategy, decision-making and client engagement by fund and portfolio managers to tune the approach to ESG for each product and asset, whilst enabling the business as a whole to set future minimum standards targets for all assets under management.
  • Appointing the Head of Real Estate ESG to the direct real estate Investment and Investment Strategy Committees, with voting rights, ensuring enhanced expertise is deployed to fund strategy and underwriting decisions.
  • Establishing clear responsibilities for the effective implementation of the new ESG Strategy across the business, with specific and coordinated central support roles defined for Investment & Product Strategy, Real Estate Research, Fixed Income, Marketing & Communications, the Real Estate ESG team and the central ASI ESG team.
  • In addition to instigating independent verification of ESG data, bringing the application of the ESG Impact Dial into the scope of the investment governance and oversight.

Our work involved extensive collaboration and engagement with the RE IMC, the Real Estate ESG team, key stakeholders across the wider investment management business, as well as an extensive group of ASI’s investor clients from all major capital markets geographies. Although client strategies and expectations on ESG vary considerably, the rise in appetite for impact investing solutions, outlined in this recent ASI article, coupled with a demand for more effective ways of measuring risk, performance and outcomes beyond the limitations of global benchmarking systems, has become a feature of client feedback.

Remarking upon our role, David Paine, global co-head of Real Estate, said: “Our drive to be an industry leader on ESG factors is central to our investment philosophy. It’s an ambition that requires clarity of foresight, investment discipline and constant innovation. We are grateful to Hillbreak for the insight they brought to our understanding of both clients expectations and best practice enabling us to further enhance our approach and embarking on a new and exciting phase of responsible and impactful property investing at ASI”.

Pertti Vanhanen, global co-head of Real Estate, added: “We selected Hillbreak to work with us because of their reputation as the leader in their field for providing constructive, strategic and commercially-attuned advice on ESG. They more than lived up to our expectations, with their collaborative and engaging approach a stand-out feature of their way of working”.

Jon Lovell, who led Hillbreak’s input, commented: “It has been a real pleasure to support ASI in further developing and expanding its strategic approach to ESG across its real estate platforms globally and to help unify the distinctive elements of its heritage approaches. We were delighted to have the opportunity to work so closely with its highly regarded Real Estate ESG team, as well as the extended leadership group, to guide things on to the next level”.

A new video outlining the approach has been launched on the ASI website here.

Global Forces

ESG Factors

 

 

 

 

 

About Hillbreak

Hillbreak provides training and strategic advisory services for organisations seeking purpose and competitive advantage in a changing urban world. Its mission is to expedite the transition to a sustainable policy, business and investment environment by bringing intelligence, challenge and inspiration to its clients and stakeholders.

About Aberdeen Standard Investments

ASI is the investment arm of Standard Life Aberdeen plc and manages £557.1bn* of assets, making it the largest active manager in the UK and one of the largest in Europe. A global portfolio of £44.0bn of property assets under management**makes it the second largest real estate investment manager in Europe.

* at 30 June 2018

** at 31 March 2018

Round Hill Capital

Integrity, Innovation, Impact – a new ESG Strategy for Round Hill Capital

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Integrity, Innovation, Impact – a new ESG Strategy for Round Hill Capital

  • Round Hill Capital launches new ESG Strategy, advised by Hillbreak
  • Underpinned by a refreshed statement of Core Values for the Company
  • Jon Lovell appointed to global ESG Committee to help support continued oversight

Since its foundation in 2002, Round Hill Capital has become a market leader in the real estate accommodation sector – offering a fully integrated investment, development and management approach alongside venture capital for early stage, high growth property technology companies.

Hillbreak was engaged by Round Hill Capital to develop an Environment, Social and Governance (ESG) Strategy to help to underpin its corporate and investment management activities. Working with Round Hill Capital’s Executive Committee and a Company-wide Steering Group, we undertook in depth analysis to identify opportunities for a compelling ESG strategy that aligns with the Company’s pioneering, macro-driven and nimble approach to business.

Extensive internal surveying and dialogue was a key part of our approach, to further engage collaboratively with employees and decision-makers in the process of determining the core areas of focus for the ESG Strategy. We found significant appetite for Round Hill Capital to formalise a comprehensive and proactive approach to responsible property investment that aligns with investor objectives and supports financial returns and which also, notably, embraces key ESG impact themes emerging within the market.

Examination of the Company’s current activity revealed several examples of strong ESG-related business practices, which presented a clear opportunity to build on the existing internal culture to more consistently integrate ESG considerations into the investment process and development and asset management practices.

The resulting ESG Strategy sets out clear ambitions targeting performance and positive change, supported by a refreshed statement of the Company’s Core Values, which clarify Round Hill Capital’s commitments as a Group and its expectations of the conduct of its employees and wider stakeholders. Features of note include:

  • A focus on Round Hill’s core strengths of innovation, flexibility and proactivity – the Strategy highlights positive ESG impact, first mover advantage and stakeholder engagement as key features within its overarching business objectives.
  • Highlighting integrity alongside innovation, ensuring an underpinning of consistent standards and a continual drive to take account of ESG impacts, risks and opportunities in all business activities.
  • A structure for embedding ESG more formally into the real estate investment process. A suite of decision-making tools and best practice resources are currently being developed.
  • Prioritisation of internal capacity building and reporting capability, including systematic internal training, the development of ESG requirements for operating partners, and extension of investor and external reporting to include ESG performance.

The ESG Strategy combines strong foundations with the flexibility for Round Hill to capitalise on its strengths and take a positive, opportunistic and responsible approach to ESG.

Implementation will be led by a newly established ESG Committee, to which Jon Lovell, co-founder of Hillbreak, has been appointed as an independent member.

Commenting on the new ESG Strategy, Lovell said, “Working with Round Hill Capital has been a unique and insightful experience for Hillbreak. The Company’s blend of fast-paced successful growth and investment agility in alternative sectors, together with its core values, has created a really interesting opportunity to present a distinctive approach centred on integrity, innovation and impact. We’re so pleased to have been retained to help support Round Hill Capital with the realisation of its ESG goals.”

Paul Bashir, President and COO, commented, “Our new ESG Strategy is the formal expression of our innovative approach to community, wellbeing, environment and risk.  Round Hill Capital is really enthused by the prospect of working with our investors and other stakeholders to drive positive social and environmental outcomes and change alongside the delivery of investment performance.”

He continued, “Hillbreak has been an excellent partner for us to work with in helping to bring forward our new ESG Strategy. They have been challenging, bold and ambitious, which sits perfectly with how we do things at Round Hill Capital. I’m delighted that Jon will continue to bring insight, ideas and objectivity by serving on our new ESG Committee.”

 

About Hillbreak

Hillbreak provides training and strategic advisory services for organisations seeking purpose and competitive advantage in a changing urban world. Its mission is to expedite the transition to a sustainable policy, business and investment environment by bringing intelligence, challenge and inspiration to its clients and stakeholders.

About Round Hill Capital

Round Hill Capital is a leading global real estate investment, development and asset management firm.  Since inception in 2002, Round Hill Capital has acquired and repositioned for long-term institutional ownership over 110,000 residential units and student housing beds. Round Hill is a responsible landlord of assets offering housing to a range of occupants, from students through to senior citizens.

Round Hill Capital has an established track record of generating high risk-adjusted returns and invests in and asset manages real estate on behalf of some of the world’s leading institutions and private investors.

Further information on Round Hill Capital is available at: www.roundhillcapital.com.

Manchester University NHS Foundation Trust

The masterplan – a national exemplar of a sustainable healthcare strategy

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Hillbreak recently teamed up with our long-standing friends and collaborators, Creative Concern, to support and advise the University of Manchester NHS Foundation Trust (MFT) on the development of its new sustainability strategy, known as ‘The Masterplan’.

The strategy follows sector guidance developed by the Sustainable Development Unit (SDU) and NHS Improvement, and incorporates the following four core themes:

  •   Environment: realising environmental gain
  •   Health: enhancing health and wellbeing
  •   Future: Being future ready
  •   Community: delivering social value

MFT Core Themes

These in turn are woven through the ten categories under the Sustainable Development Assessment Tool, which is the UK healthcare sector tool for measuring and improving sustainability performance. These include: corporate approach; asset management and utilities; travel and logistics; adaptation; capital projects; greenspace and biodiversity; sustainable care models; people; sustainable use of resources and greenhouse gas emissions.

As the largest Acute Trust in the UK, ambitions for the new strategy are high. It has been endorsed by Andy Burnham, Mayor of Greater Manchester, in the context of his ambition to make Greater Manchester one of the leading green cities in Europe.

MFT Sustainable Care Model

It was crucial to consult with the Trust’s diverse staff base to understand what the Trust’s sustainability goals and objectives should be – and how the Trust could lead the field in a national context.

Informed by MFT staff views, and using our combined knowledge of megatrends,  strategic foresight, sustainability reporting and governance, we supported the MFT team to help develop ‘The Masterplan: Making Sense of Sustainable Healthcare, 2018-2023, including through a series of strategy workshops.

The Strategy, which was approved by the Trust Board and published in November, has already been deemed by NHS Improvement (NHSI) as a national exemplar.

The Masterplan is available to view here

Oslo Opera

Perfect Storm for Managing Agents

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Consultants Howard Morgan & Jon Lovell offer a six-point solution to the problems of the property industry’s managing agents.

Managing agents caught in the ever-increasing whirlwind of client demands and occupier expectations must embrace risk and innovation if they are to survive.

This is the view of two independent experts, operating in complementary spheres of the real estate industry, who are offering them a blueprint for survival.

Jon Lovell, whose Hillbreak business provides strategic advice and training on sustainability and responsible investment, and Howard Morgan, whose RealService consultancy operates in the world of customer experience, believe the role of the traditional managing agent is now in peril.

Lovell and Morgan see a perfect storm of challenges coming from two principal directions:

  • Increasing performance, compliance, cost efficiency and transparency demands from landlords, including on environmental, social, wellbeing and health and safety matters. These are testing managing agents who are going to need stronger leadership, more effective systems and new capabilities to keep ahead of the game
  • Meanwhile, those who occupy the buildings they manage are becoming fickle and savvy customers, expecting a more enriching experience, greater flexibility and reliability.

With rising expectations from occupiers and their landlord clients, managing agents are feeling the pressure.

Bill Hughes, boss at Legal and General Investment Management recently turned up the heat. Writing in Property Week, Hughes said managing agents are being asked to provide services “they are not equipped to offer” as their role moves from rent-collection and basic maintenance to provider of “customer service, facilities maintenance and engineering, sustainability and CSR strategic thinking”.

In response, property managers MJ Mapp blamed property owners for instigating a tendering process which has outsourced management to the lowest bidder. They said owners should select managers who share their values and not take management in-house, risking losing focus on their core business.

Lovell and Morgan have sympathy with both perspectives, which points to a collective market failure rather than a single source of blame.

According to Morgan, salvation for the property industry’s operational intermediaries lies in persuading owners and investors to join them in forming strategic partnerships which harness the talent of the client, the managing agent and an increasingly disparate supply chain. This would require a fundamental change in thinking from the current “hands-off” outsourcing model.

Their Six-Point Survival Blueprint focuses on:

  1. Better business alignment and planning
  2. Clearer agreements and outcome-based performance contracts
  3. Stronger leadership from senior management
  4. More effective and consistent deployment of capability and technology
  5. Greater harmony of message & transparency to customers
  6. Closer alignment between performance and remuneration

Morgan’s blueprint inspiration came from a visit to John Lewis’s state-of-the-art warehouse complex in Milton Keynes. Here he saw collaboration in action, in the form of the company’s partnership with Knapp, an Austrian firm, which enables the retailer to deliver more than 220,000 different product lines to its stores and online customers.

He says: “John Lewis’s reputation is based around customer service and it is putting that reputation into the hands of a third party. It has been able to do this because of the relationship it has with Knapp; it is a strategic partnership.

“Property companies put their reputations in the hands of managing agents, but their relationship is nothing like the one between John Lewis and Knapp. Why would managing agents embrace risk or invest in technology when there is no long-term partnership?

“Our blueprint is about taking best practice from outside the industry and working with our clients to apply it to the world of property,” says Lovell.

To collaborate successfully, Lovell points out that owners and managing agents must work together on a business plan which identifies a mutual vision and documents key areas of responsibility, risk and reward. Having clear, outcome-based objectives across the spectrum of financial performance, customer experience, environmental responsibility and community impact means each partner knows exactly what they bring to the relationship and how they are accountable.

Being on the same page enables the creation of benchmarks or indicators to monitor progress, while recognising strengths and weaknesses allows each partner to utilise their particular expertise and concentrate on their core competencies.

Any arrangement must have the complete commitment of the senior executives of both parties and be promoted consistently to customers as a partnership of equals. Financial rewards should be based on key performance indicators and provide incentives while, in terms of governance, the arrangement should be reviewed regularly, in a spirit of collaboration and improvement rather than conflict and an ever-poised stick of retendering risk.

Bear in mind too, that partnerships can take time to flourish and need nurturing.

Morgan points out that research suggests it is cultural differences, rather than financial or corporate considerations, which cause partnerships to break down, hence his enthusiasm for putting the customer at the heart of every property company’s business strategy.

Lovell says: “Dissatisfaction of landlords with the service provided by managing agents is one of the key motivations for increasing the frequency of re-tendering. They see it as a way of incentivising performance but actually it’s part of a downward spiral; a race to the bottom which actually disincentivises investment in innovation and skills.

“We need to find an inclusive approach to performance management and remuneration to incentivise performance. Investor expectations are strengthening and likewise the demands of the occupier market.

“Strategic partnerships are being trialled but currently only really in the area of energy savings and, in many cases, with the managing agent having been circumvented by the client searching for a more reliable and responsive solution.

Morgan and Lovell do not underestimate the challenge to create an upward spiral of quality and reward.

“Unfortunately, clients have, over a sustained period, driven the agenda, which has been focused on realising more outcome for less money. Margins are very, very low as a result.”

Morgan is also frustrated that customer engagement is not factored into the performance of investment managers despite evidence proving that high customer satisfaction can improve the bottom line by almost two per cent.

“You can typically get information on energy, waste and water consumption but you can’t get information on occupier engagement,” he says.

Morgan and Lovell believe that occupiers will become increasingly vocal and willing to up sticks if they can’t get the solution and quality they want from their landlords, having seen new levels of aspirational workspace entering the market through disruptors such as WeWork.

As Morgan says: “Our approach is fundamentally about creating an alignment of interests between the owner, manager and occupier.” As the strategic partnership of John Lewis and Knapp shows, it’s ultimately the customer who benefits and there lies the key source of sustainable, competitive advantage in business.”

This article was authored jointly by Jon Lovell, Co-Founder & Director of Hillbreak, and Howard Morgan, Managing Director of RealService.

Architecture 2256489 1920 Copy

Responsible Property Investing with M&G Real Estate

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M&G Real Estate is the property investment unit of M&G Investments and has £29.5 billion of assets under management globally (as at 30th of September 2017). It has had an active Responsible Property Investment (RPI) programme for over a decade and is widely regarded by industry stakeholders, with whom it engages regularly on a range of environmental, social and related governance matters, as an international market leader in this regard.

M&G Real Estate

Report: Responsible property investing 2017

The recent publication of its 2017 Responsible Property Investing report follows a comprehensive review of its ESG activities, and sees the launch of a new vision and updated set of priorities for its responsible investment activities across the globe.

Hillbreak was pleased to advise M&G Real Estate throughout this process. We worked in close partnership with its exceptional team of RPI specialists to engage and support the Board and senior leaders to explore, define and substantiate a new vision centred on enriching the lives of people and communities by creating and managing world-class places, in turn delivering positive value for investors, society and the environment.

The new RPI Strategy includes a focus on four themes, which according to Hillbreak analysis, stakeholder feedback and wider market insights, are considered ESG priorities because of the risks they pose to financial markets generally, and the resilience and social utility of the built environment. These are specifically:

  • Socio-economic benefit – creating positive socio-economic outcomes by developing high quality places where people want to be and, through proactive participation in communities, supporting jobs, skills development and economic growth. 2025 targets for this theme include 100 places globally having benefitted from community programmes delivered by M&G Real Estate.
  • Environmental excellence – delivering environmental improvements at assets to reduce operating costs, carbon emissions and the use of natural resources, thereby helping to attract and retain occupiers and ensuring that environmental risks are managed. 2025 targets for this theme include securing green building certification for 50% of assets (by value) globally and realising a 25% reduction in energy intensity and associated greenhouse gas emissions based on an index trend for all landlord procured energy.
  • Health, wellbeing and occupier experience – considering health wellbeing and experiential factors in how buildings are designed and managed so that occupiers have happy and productive employees, retail destinations attract customers and homes are places where people want to live. 2025 targets for this theme include reaching 10 million people through health, wellbeing and inclusivity programmes, and measuring and improving the satisfaction, happiness and wellbeing of occupiers.
  • Smart, secure and connected – implementing connectivity solutions to harness opportunities and future proof investments in a world where smart physical and digital infrastructure is crucial to competitiveness. At the heart of this theme is the 2025 target to deliver enhanced digital and physical connectivity across the asset base through a framework of activities underpinned by thought leadership.

The new strategy is underpinned by a series of ‘strong foundations’. These are the corporate and investment management fundamentals, such as encouraging occupiers to sign up to our green lease clauses and the integration of material RPI issues into the acquisition due diligence process, which M&G Real Estate believe must be in place before it can deliver its RPI objectives. Two key principles guide the overall approach:

  • Enhance and Transform – being at the forefront of identifying and influencing the drivers of change shaping our investment strategies accordingly, we will continue to deliver strong returns for our investors in the long term.
  • Safeguard and Future Proof – combining innovation with best-in-class management will set the bar for exceptional workplaces homes and leisure destinations which have enduring appeal and benefit local communities and economies around the world.

In Hillbreak’s view, the new RPI Strategy reflects positively M&G Real Estate’s rigorous house-wide approach to its fiduciary responsibilities and will further consolidate its position as a leading responsible manager of non-listed real estate funds globally.  In particular, the focus on embedding tailored ESG principles and objectives into individual fund strategies sets an important tone for the wider market; it is only through this type of bespoke integration, with individual fund managers having ownership of their approach, that the global responsible property investment agenda will move forward effectively.

 

 

ACM

Embracing a Changing Future at Airport City Manchester

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The joint venture partners* of Airport City Manchester have launched an Embracing a Changing Future Prospectus and are asking for stakeholder feedback on their aspirations for delivering positive, long-lasting impacts for the economy, local communities and the environment.

Produced in collaboration with Hillbreak and Creative Concern, the Prospectus lays out a vision for a world-class, multi-business campus, where occupiers create, trade, learn and collaborate, driven by commercial endeavour, social purpose and the opportunity to translate corporate ambition into realised local impact and value. It describes an Airport City community that is united by the spirit of ambition and innovation, as well as the commitment of the joint venture partners and their Development Manager to deliver outstanding buildings, spaces and services. By creating a vibrant, healthy, environmentally-positive setting, together with brilliant career, learning and training opportunities for local people, Airport City Manchester stands to be a genuine flagship of the Northern Powerhouse, supporting commercial success in a rapidly changing and highly connected world.

The Embracing a Changing Future vision is built around four strategic pillars: opening up a world of opportunity; creating a place where great things happen; empowering an ambitious community; and securing a lasting legacy. A wide range of programme ideas and initiatives are set out to underpin Airport City Manchester as one of the most exciting business destinations in development today and one of the most significant in the UK since the 2012 Olympic Park. When completed, it will incorporate 5 million sq ft. of offices, hotels, advanced manufacturing, logistics facilities, hybrid and ancillary retail space.

To provide feedback on any part of the Embracing a Changing Future Prospectus, or to suggest ways in which the vision for Airport City Manchester can be realised, please visit: airportcityfutures.com

* The Airport City Joint Venture Partners are Manchester Airport Group, BCEGi, Carillion PLC and the Greater Manchester Pension Fund.

Hillbreak appointed to BMO Real Estate Partners ESG Committee

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Hillbreak, the market-leading training and advisory specialist in responsible investment for real estate organisations, has been appointed to the Environmental, Social & Governance (ESG) Committee of BMO Real Estate Partners (BMO REP). The appointment coincides with the release of BMO REP’s new Responsible Property Investment (RPI) Strategy, on which Hillbreak provided extensive advice.

BMO REP is a pan-European property investment and asset management specialist that is part of BMO Global Asset Management. It has £6.7 billion of assets under management (as at 30 June 2017) across several listed and unlisted investment vehicles, including the FTSE250 F&C Commercial Property Trust. As well as its integration within BMO Global Asset Management, which has an unrivalled pedigree for responsible investment and ethically-screened investment products, a key point of differentiation for the real estate business is its in-house asset management capability, meaning that it is not reliant on third party managing agents for the delivery of its ESG commitments at a property level.

The refreshed ESG Committee, to which Hillbreak will provide independent advice and external challenge, has the dual responsibility of overseeing the implementation of the new RPI Strategy, whilst advising the Investment Committee and wider business of the evolving demands of market stakeholders, including regulators and investors.

Responsible Property Investment

BMO REP RPI Strategy 2017

Hillbreak’s advice on the new Strategy was complemented by the development of an integrated acquisition and portfolio risk management and benchmarking tool, which prioritises assessment of ESG issues that are relevant to individual asset classes, property types and locations, and which provides a framework for quantifying and reporting on potential investment risks.

Detailed operating requirements and ESG guidelines were also prepared for asset managers and property managers, linked to an asset classification system based on the materiality of individual property’s impacts, and for which training was delivered to all relevant staff.

 

Commenting on Hillbreak’s appointment, Angus Henderson at BMO REP,

“Responsible Property Investment is an issue that is of increasing importance to investors. Governance is always high on our agenda and, while the structures provided by BMO Global Asset Management mean that we operate to the highest standards, Hillbreak has provided exceptional clarity of advice that has been instrumental in taking the business to a new level in our approach to Responsible Property Investment.

“We’ve worked closely with Jon and Miles over several months and they’ve been particularly adept in helping us to translate the implications of strengthened client demand into the unique way in which our business operates.”

Hillbreak co-founder, Jon Lovell, added,

“It’s been a privilege to work with BMO REP in helping to develop its new RPI Strategy, and we’re honoured to have been asked to join its ESG Committee as an independent member. The role sits perfectly with our mission of expediting the transition to a sustainable policy, business and investment environment by bringing intelligence, challenge and inspiration to our clients and stakeholders”.

Notes to Editors

About Hillbreak

Hillbreak provides training and advisory services to organisations seeking competitive advantage in a changing urban world. Its mission is to expedite the transition to a sustainable policy, business and investment environment by bringing intelligence, challenge and inspiration to its clients and stakeholders.

Please see www.hillbreak.com for further information about Hillbreak.

Follow Hillbreak on Twitter: www.twitter.com/hillbreak_ltd  |  @hillbreak_ltd

Like us on Facebook: www.facebook.com/hillbreak.ltd

For press enquiries please contact:

Jon Lovell, Co-Founder & Director

jon@hillbreak.com | @lovell_jon | +44 (0)7825 531031

Strategic Foresight: Stage 6 – Acting on an Agreed Agenda

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Acting on an Agreed Agenda

Given that strategic foresight inherently has a long and broad horizon, the challenge to those concerned with taking action today to secure a better future tomorrow lies largely in forging the link between the vision ahead and the bottom-line now. This final phase of “Acting” is primarily about communication – making the conceptual more material, and getting the individual and collective ‘buy-in’ of all involved. Successful implementation also entails creating an acceptable action agenda, establishing an appropriate intelligence system and effectively institutionalising strategic thinking.

Communicating Policy Proposals

A presentation protocol for policy proposals should have been designed and agreed from the outset. So far as possible, all significant stakeholders should be engaged and key decision-makers committed. Great care has to be taken, moreover, to construct a communication plan that conforms to the culture of the organisation and confronts it on its own terms. Furthermore, it should have been tested and refined in a variety of feedback activities prior to public launch. From experience, we have found the following factors worthy of consideration:

  • The forum and format for the final presentation should carefully be determined.
  • Time spent rehearsing the best style for the particular audience is never wasted.
  • The message often has to be tailored specifically recognising the complexity involved.
  • Beware a mismatch in the mindset of the consultant and the client in considering expectations within different timeframes.
  • Do not be afraid of being provocative and providing an element of surprise.
  • Ensure an adequate explanation of alternative pathways and their consequences.
  • Never sacrifice integrity simply telling an organisation what it wants to hear.

Plans, policies and proposals alone, however perceptive they may be, do not always readily convince organisations to address change. Scepticism of the findings from strategic foresight is not uncommon, and special skills on the part of the consultant are required to shape and advance an organisation’s awareness of the need to revise, reform and renew. We have always found that the ‘scenarios’ developed earlier in the process also promote a better understanding of the organisation’s position in terms of policy implementation.

Creating an Action Plan

It is a common conception, to which we concur, that ‘real’ change invariably only occurs through a sense of either potential crisis or great opportunity. Many organisations and their decision-makers are difficult to disturb from their comfort zones. It is often necessary, therefore, to generate a belief that the organisation cannot continue to operate in the way that it has – either through fear of imminent failure or the missed chance of boundless success. Again, there are a few pointers toward best practice.

  • Creating a sense of urgency challenges the complacency of the client organisation.
  • Beware of under-communicating the vision, and neglecting to connect proposed change to the organisational culture.
  • Reinforce what the organisation is already doing and build from there.
  • Challenge the assumptions that underlie the organisation’s expectations. Too many organisations expect the future to be like the present, only bigger and faster.
  • Remember, all of the information necessary to make perfect decisions is never there.
  • Identify ‘milestones’ along the path to the preferred future, and celebrate small successes on the way.
  • Consider the possibility of investing in at least one “crazy idea”.

A common attitude towards the future is one of regret: “if only we had known earlier, then we could have……”. Constructing an action plan that has at least considered unconventional thinking will at least minimise the threat of this happening.

Establishing an Intelligence System

Any organisation large enough to have a formal planning process should also possess an ordered and customised system for developing business intelligence. One that feeds into it and is properly aligned. This intelligence system should constantly be monitoring and reporting on the external business environment. Further, it provides a common process for asking questions and formulating answers. Like a form of corporate radar, it also acts as an ‘early warning system’ to detect ‘weak signals’ flickering on the horizon that are the precursors of threats and opportunities. Commonly, it is held that there are a number of key steps to this.

  • Identifying the most important fields for observation.
  • Determining the pivotal questions to be posed about the future.
  • Clarifying the critical issues surrounding strategic threats and opportunities.
  • Deciding what are the most appropriate sensors – people, networks and search systems.
  • Selecting suitable sources in terms of specialist expertise.
  • Looking for reliable indicators of ‘discontinuous change ’ which are easy to collect and comprehend.

Increasingly, strategic foresight is being employed in response to ‘turbulence’ in the external environment. A lack of awareness, preparedness and adaptability can easily lead to organisations failing to accommodate disruption. Setting-up a satisfactory intelligence system as part of plan implementation becomes imperative.

Institutionalising Strategic Thinking

All too often ‘futures thinking’ and ‘strategic foresight’ are conducted by corporations on a one-off basis. It is, however, becoming progressively recognised that they need to be embedded within the organisational structure and decision-making processes of the firm or agency. Scanning for trends and issues should be part of corporate daily practice, and regular analysis to reflect on the insights thus garnered scheduled repeatedly into organisational programmes. A significant initial time investment is required to establish the framework and discipline, but, once done, the practice becomes second nature, and the mindset of the organisation invariably starts to change. Quite soon, the quality of the process and the added-value of the outcomes becomes evident. Indeed, to conclude, one is reminded of the adage coined by George Bernard Shaw: “You see things and say ‘Why?’ But I dream things that never were and I say ‘Why not?’”

Strategic Foresight: Stage 5 – Planning Strategic Options

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Planning Strategic Options

Strategic planning options are the policy pathways that transport the realm of long-term, big-picture vision to the reality of the need for a set of actionable tactics to tackle present circumstances. Such planning thus provides an organisation with a roadmap showing how it can get from where it is, to where it wants to be. At Hillbreak, we aim to consolidate a client’s future policy framework into no more than five strategic planning options. We have found, moreover, that there are an array of common characteristics that distinguish and define a successful strategic planning exercise. These can usefully be summarised as follows:

1.   Think Strategically

Strategic thinking is primarily about finding and developing a corporate foresight capacity for an organisation, by exploring all possible organisational futures, and challenging conventional thinking so as to foster better decision making today. It requires identifying assumptions about the future that might require examination, testing and subsequent modification. Most excitingly, such a futures approach through foresight can constitute an effective platform for collaborative planning. But, within client organisations, there has to be awareness, openness and a willingness to be disturbed! Strategy emerging from the bottom-up and employing unusual and remarkable sources is often best regarded.

Several major maxims make strategic thinking more impactful:

  • Make the unique culture of the organisation central.
  • Stimulate strategic conversation at all levels; don’t simply confine it to the ‘Executive’.
  • Construct a ‘scaffolding’ of ideas; connecting, integrating and developing views from all around.
  • Understand what needs changing, and what doesn’t. In the same context, recognise what essential processes and practices already existing within the organisation need preserving and promoting.
  • Identify critical ‘branching points’ where an organisation reaches a position of strategic choice when different pathways offer varying views of how the future might play-out.

The challenge for corporate foresight in thinking strategically, therefore, is to help organisations achieve and sustain a ‘good fit’ within their evolving policy landscape so as to be able to anticipate and respond to transformational change effectively. This is about people every bit as much as it is about process.

2.   Developing Strategic Policy Options

First, and foremost, strategic recommendations must be based on the distinctive attributes and abilities of an organisation. Foresight, of course, should always emphasise the external environment and take a longer, broader view; but the consultant must also be aware of the client organisation’s internal strengths and inherent deficiencies. Strategy, perforce, has to be developed around an organisation’s core resources and capabilities, and the need for building policy options from the inside out. Again, from experience, there are a few guidelines worthy of mention:

  • Determine the way in which the organisation is ‘inimitably unique’, and how that uniqueness can best be turned into a continuing valuable concept, commodity or service. It is not always being good at something that counts, but being different!
  • Imitating the best policies and practices of others is notoriously difficult and rarely successful. Anyway, if a plan, product, or process can readily be copied, its value will soon be competed away.
  • Once the unique competency is developed, it can be leveraged across different parts of the organisation and the markets in which it operates.
  • Before strategy is fully implemented, it should first be evaluated across multiple dimensions – performance measures, stakeholder perspectives and prospective timeframes.
  • Include the “No-Go”, the “Most Plausible”, and the “Preferred” when recommending strategic policy options, so as to cover what to avoid, what is most likely to happen, and what to work towards.

It is, of course, good practice to stress-test strategy as much as practicable during its formulation; fixing any major mistakes after implementation can be extremely costly.

3. Examine the Issues

Defining a problem, and communicating it to others, so as to prepare an effective planning solution is a familiar task to all concerned in decision-making processes. A technique favoured and followed by Hillbreak comprises the following investigative process:

  • Situation. Where are we now? What has been going on? And how do we think it’s working – or not?
  • Complication. Something is happening, or looks likely to happen, that could significantly change the way we do things.
  • Evaluation. There are a number of consequential factors influencing the way matters could materialise.
  • Options. Several alternative courses of action present themselves, all of which have different outcomes.
  • Recommendation. Given all the circumstances, a preferred policy option is selected.

In the context of strategic thinking in corporate foresight the recommendation would be framed as a positive policy option.

Conclude with contingency! In these volatile days of increasing risk and greater uncertainty, it should almost go without stating that the corporate foresight consultant must help the client prepare and rehearse contingency plans for the inevitable surprises that will occur over the longer, and even shorter, term. As Aristotle discerningly declaimed: “Probably something improbable will happen”!

Strategic Foresight: Stage 4 – Visioning a Preferred Future

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Visioning a Preferred Future

The essential purpose of Strategic Foresight is to make better, and more informed decisions in the present. All organisations, however, need to ask the basic questions about their future: “Where are we going? What do we want to be? And how do we know what we want to be doing?” In achieving this, they not only need to identify all the implications of alternative futures; challenge the basic assumptions of their thinking and operation; but also “think big” about their aspirations ahead.

One of our favourite sayings at Hillbreak when conducting a Strategic Foresight Exercise and arriving at the ‘Visioning’ stage is: “Imagine ahead and plan backwards”. ‘Presencing’  is the professional term. This is the reverse of the conventional ‘trend extrapolation’ mindset of most planning practices, but we believe that creating a vision for the future is vital in helping identify long-term goals and strategies. Nevertheless, it should be recognised that a strategic vision is akin to a ‘lodestar’ in that it provides an image of the future that offers direction yet is never reached. In this way, visioning is also an iterative process, as the formulation of strategies and plans may raise issues and questions that make it wise to revise the vision and the consequent strategy over time.

A strategic vision serves organisations as a template, model, or interpretive framework for making sense of the daily puzzle; as well as providing a rallying point for focusing the organisation’s work. In tough times, moreover, it can provide reassurance that current challenges will pass and are worth navigating through. It also aligns the organisation and its stakeholders around a common purpose communicating expectations to all concerned. A great vision statement, however, does not guarantee great results. Unless everyone involved believes in the vision, and acts accordingly, it is simply words on paper.

Guiding Principles

The main advantages of creating a vision of an organisation’s preferred future is that it helps:

  • look toward the horizon;
  • consider the multi-faceted changes facing society, the sector, and the organisation;
  • incorporate the entrepreneurial forces that it takes for organisations to succeed;
  • develop a high-performance appraisal and incentive system;
  • support continuous improvement; and,
  • foster symbiotic relationships.

The following guiding principles should be considered when developing the preferred future vision during any workshop.

  1. Visualisation: in order to achieve a preferred future, it is important to be able to imagine it. Rushing towards a hazy ideal is wasteful of energy and resources, and, to that end, the visual conceptualisation of the future is vital.
  2. Communication: the realisation of future goals is only of value if all are willing to support and encourage their implementation. Effective communication of ideas between, and from, people and organisations is strategically crucial in creating the broadest base from which to achieve the preferred future. Involve ‘remarkable people’ throughout.
  3. Integration: a preferred future which is clearly exclusive and selective should not form the basis of the vision. Selectivity leads to the creation of a preferred future for some people, but not for all. Integration of people and ideas at this stage of the process is a key factor in determining the long-term success or failure of the work.

How to Envision a Preferred Future

Somewhat prosaically perhaps, the following procedure is illustrative of how to envision a preferred future in a workshop setting:

  1. The participants should seat themselves in a horseshoe or semi-circle arrangement in the main room.
  2. Every participant is asked by the facilitator to spend time thinking carefully about what aspects of a desired future they consider important. (It is imperative that everybody does this with respect to the issues fleshed out during the day, particularly the scenarios and their turning points).
  3. Approximately 2 to 3 aspects should be written down by each participant in a ‘statement-like’ format on cards or post-it notes.
  4. Each participant is then asked to read out their contribution to the rest of the group.
  5. The facilitator collects each of the cards or post-it notes and arranges or pins them onto a table or board at the centre of the room.
  6. A short discussion is then encouraged to consider each of the aspects proposed: similarities, differences, connections and new ideas.
  7. Once this discussion has taken place, the final aspects of the vision should be agreed by the participants and then compiled by the facilitator.

It is worth striking a note of caution regarding the very term “vision” in the context of an organisational setting, for the word itself can conjure up notions of ‘rapture’ rather than ‘reality’! Envisioning a preferred future is far more about perceptive and aspirational foresight than organisational yearning and wish fulfilment.

The Lasting Benefit

It has long been recognised that visionary corporations attain extraordinary long-term performance. Successive studies have found evidence that companies striving to learn and grow through futures-oriented thinking outlast companies focused solely on economic returns. A famed example by Royal Dutch/Shell found that the average life expectancy of Fortune 500 companies was under fifty years, but many were over two hundred years old. The key difference between the short- and long-lived companies was that the former focused on financial returns while the latter concentrated on the community of people comprising the organisation, maintaining a strong sense of identity and purpose through shared vision of a preferred future in good times as well as bad.

A concluding injunction for the visioning stage of the strategic foresight process is: “Dare to be the ridiculous!” The mindset should be close to Disney’s concept of: “the willing suspension of disbelief”; emphasising the presence of mind to consider even the most ‘off-the-wall’ alternative prospects, pathways and solutions, and searching for the kernel of a useful notions within them. Build, therefore, upon wild ideas and continue to ask the ‘What If?” questions.