3.20 RELATED TECHNIQUES
3.20.1 Industry foresight as a strategic planning tool
Nu Metro Theatres introduced coffee shops as well as warm cheese straws as part of their confectionery. These incremental additions while trying to fulfil future trends of South African cinema goers, where driven by what the exhibitors believed to be appropri- ate, as seen in other overseas markets as opposed to what the consumers wanted. Once again these are incremental changes to the industry and not revolutionise in the industries business model.
These efforts were not far-reaching enough, and where not based on thorough re- search in terms of what the future should be. They have failed in the short term to win ei- ther of the organisations any market share, or growing the number of patrons that frequent cinemas.
If proper industry foresight had been pursued, the following questions would have been asked to essentially help the organization create this future:
1. What type of customer benefits should the organization strive to provide in the fu- ture? Is it the film they are going to watch or is it an entertainment offering which incorporates the film as part of the experience? If the core of the benefits required by the customers is not the actual movie, then the exhibitors' business model would need to be changed.
2. What competencies does the business need to develop or acquire to be able to pro- vide the benefits identified above to the customers? The exhibitors' core compe- tencies are film exhibition, if the benefits required by the customers are not just the movie, then the exhibitors need to acquire the competencies required to provide the other benefits that the customers require. This would effectively put them at a disadvantage, as they would effectively be trading in an environment that they do not specialise in.
3. How must the interface between the customer and the organization be reconfig- ured in the future? In what format should the offering be offered? By properly us- ing industry foresight the cinema exhibitors could effectively be making their indus- try obsolete. If that is effectively what is required, then exiting the industry could be the solution for the exhibitors, which leaves them with no businesses. This alterna- tive would not be preferable to the exhibitors.
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Industry foresight is essential for an organization to secure a future for itself, but having industry foresight does not guarantee success. Not all companies that are insightful achieve industry leader positions. There reason being poor execution. Execution goes hand in hand with foresight; one is not worth much without the other.
There is an intertwined relationship between industry foresight and achieving opera- tional excellence. What organizations conclude to be operational failures today could actu- ally be yesterday's foresight failures, and visa versa. If this statement is extrapolated to what is happening in the cinema industry today, then it would be safe to assume that the stag- nant attendances being experienced today could have been avoided had more thought and planning been put into the future of exhibition. This failure elaborates the importance of taking a view on what the future of any industry is likely to be if you want to operate in that future.
To get to the future first, organizations must see opportunities not seen by anyone else, and be able to exploit those opportunities. This is easier said than done. As men- tioned, operational excellence is just as important. To be able to achieve this, the organiza- tion has to have the capability or the means to foresee the future.
Industry foresight takes the approach of trying to shape the future in a way that will benefit the business. This is based on the premise that the future can be determined. Some companies have shaped the future of industries; examples that come to mind include Apple with the Ipod, Sony with the Walkman. It is important to note however that while shaping their industries, they made part of their business obsolete. This was acceptable, as the new technologies would take over from the old technologies, and their businesses could still flourish.
These companies however invested heavily in research and development in creating a competitive future. Cinema exhibitors spend very little money on research and develop- ment, and any technological breakthroughs in the industry are bought about by the manu- factures of equipment used in the cinema exhibition industry. Exhibitors are not even at the forefront of their own industry and are strongly dependent on their suppliers. This makes it almost impossible for them to use industry foresight to achieve a competitive ad- vantage.
Industry foresight is more useful to organisations that are in industries that experi- ence continuous technological changes such as information technology. By using industry
foresight they are able to continuously evolve the technologies, and thereby create a com- petitive advantage for themselves by being first to market. The cinema exhibition business model has not changed in the 100 years it has been in existence, and is therefore not an industry that is characterised by continuous technological changes; therefore industry fore- sight is not as effective a business-planning tool.