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'Forward thinking' is key to preparing for future opportunities and risks

12 January 2009

UK businesses must develop a clearer understanding of future risks and opportunities to succeed in both the recession and post-recession economy, one of the key findings in a major ‘Forward Thinking’ research report released by Barclays Commercial Bank and the Institute of Directors (IoD).

Barclays Commercial Bank in conjunction with the Institute of Directors, have just commissioned the first and largest in-depth study into how businesses in the UK understand and plan for the future. The detailed research was conducted with approximately 600 UK business leaders from Professional Services, TMT, Business Services, Financial Services, Public Sector, Manufacturing, Retail and Hospitality & Leisure. Representatives from the FM and Business Services sector took part in one of several 'round table' discussions at the end of 2008 that contributed to the research.

The Forward Thinking Report not only includes analysis of the research but also offers a practical guide for companies on how they can better prepare their forward thinking strategy. The research results show that public sector organisations are some of the most committed to forward thinking (94 per cent analyse the future and 61 per cent think they do it well). Retail and wholesale companies are less likely to analyse the future external environment, with 43 per cent saying they do not currently do this. Surprisingly technology, media and telecoms companies are also amongst the least prepared for changes in the future environment.

Other findings include:
- 30% of businesses cite a sceptical corporate culture as a factor preventing forward thinking and 53% see the wider business culture in the UK as a barrier (page 15)
- 54% of business leaders think it is becoming harder to analyse and prepare for the future (page 17)
- 50% look one to three years ahead, with 34% planning four to five years ahead. (page 36)
- 16% say they are planning less far in advance now compared to five years ago (page36)
- 31% of companies admit that the people responsible for analysing the future do not have skills that qualify them for the role (page 34)

In the Business Services sector while 77% of the Business Services sector analyse the future external environment; sector executives cite the wider business culture in the UK as a common barrier
• 23% of Business Services sector does not forward think
• 61% see the wider business culture in the UK, as a barrier to forward thinking compared to a 53% national average
• More than double the national average consider an entrepreneurial attitude makes a forward thinking company (5% compared to 2%)
• Support Services - 41% of all survey respondents think they are good at forward thinking .

Statistics from the Department for Business, Enterprise & Regulatory Reform (BERR) show that in 2007 there were almost 2 million VAT registered enterprises in the UK. The IoD/Barclays survey evidence shows a clear differential in forward thinking between the largest and smallest enterprises. However, the IoD/Barclays survey does not incorporate companies at the smallest end of the size-band breakdown. If it did, the average proportion of companies stating they did not analyse the future external environment would have been even higher. At 25 per cent, it almost certainly understate the number of organisations report that at present they do not analyse the future external environment at all, while 26 per cent of directors said they have lost potential revenue and profit due to a lack of analysis around future operating environments.

Of the 75 per cent of companies that perform forward thinking, only 55 per cent think they do it well, while the remaining 45 per cent said they only do an adequate or poor job. However, there is a clear impetus to improve on this, as 52 per cent of business leaders said their shareholders are lobbying for more analysis and demonstration of their forward planning.

Based on these and other findings, the Forward Thinking Report offers extensive recommendations on how companies of any size can effectively implement forward thinking into their planning process.

Commenting on the report’s findings and recommendations, Ray O’Donoghue, Director, Barclays Commercial Bank, said: “In today’s economic environment forward thinking is, unequivocally, more important than ever. Our report addresses this head on by demonstrating the value of implementing fundamental tools and processes to achieve a competitive edge. There are also tangible economic benefits to be gained if this process is embedded within our national business culture.”

Commenting on the challenge of getting UK Plc to embrace forward thinking, Graeme Leach, Chief Economist and Director of Policy at the IoD said: “In an increasingly complex world with great economic uncertainty, there has probably never been a better time to think about the future. If companies are to get ahead and stay ahead they must resist the temptation to place forward thinking in the ‘too difficult to do’ file. Over the coming years successful forward thinking may prove to be the difference between success and failure.”

Perceptions that UK culture lacks a forward thinking attitude persist when held up against other countries. The United States and Germany are seen as strong forward thinkers by the business leaders questioned, while only a third (36 per cent) of those surveyed think that the UK has the right culture to encourage forward thinking.

The forward thinking research was carried out by GfK and involved interviewing 581 Directors from the IoD membership and Barclays Commercial customers to understand how they undertake analysis of the future environment. Those that participated in the research were from organisations with a turnover of ₤500,000 or more and were interviewed between 29 July and 25 September 2008. Further detailed interviews with over 100 business directors and industry experts were conducted during June to October 2008 face to face or by telephone.

Forward Thinking Report


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