The Executive’s Guide to Budgeting for Foresight

A few years ago, in mid-October, I got an email from a prospective client. She wrote: “We’re planning next year’s roadmap and need outside perspective to push our thinking. We don’t have a dedicated budget, but we’ve got some leftover spend we can utilize. Can you get us a report by December 1?” 

Ironically, foresight – meant to make companies future-ready – tends to be the last thought in business planning. 

I’ve received dozens of emails echoing this sentiment. Fortunately, as you’re reading this article, it’s September – budgeting season! You have an opportunity now to ensure you’ve got the resources you need to accomplish your goals next year.

Why Foresight, and Why Now?

I spent more than a decade in the corporate world, advising company leaders on emerging factors impacting their business. All too often, I would receive a “fire drill” request – a practice that is only becoming more common.  

Why? Because we are in an era of unprecedented uncertainty, and leaders have more questions than answers. 

These uncertainties – geopolitical unrest, trade negotiations, consumer changes – can feel like they’re far off in the future, so immediate priorities like seasonal campaigns or quarterly earnings take center stage. Unfortunately, this means that they tend to creep up, avoiding attention until they’re an emergency – a fire drill.

In this period of rising uncertainty, foresight is the competitive differentiator. Companies that deliberately fund foresight are better positioned to anticipate disruption, spot opportunities earlier, and move faster than competitors. Foresight is the “secret sauce” behind many of the companies that seem to have a crystal ball.

Addressing The Challenges of Budgeting for Foresight

I’ve seen it from the client and advisor sides: budgeting for foresight is tough. There are a few reasons for that, some of which are likely to resonate with your business.

1. It feels intangible: The return on investment for foresight isn’t as immediately obvious as investment in areas like operational or marketing spend. Foresight proves its mettle over the span of years, not months or weeks. That’s a tough pill for many leaders to swallow.
2. It’s not buzzy: The discipline of foresight is often drowned out by flashier initiatives – “AI!”, “Growth!”, “M&A!” – that demand immediate focus from cross-functional teams. If AI is the chocolate mousse, foresight too often feels like the broccoli. 
3. Timelines don’t match: Budget cycles operate annually, but foresight efforts often require multi-year investments. It can be challenging to make a case for resources so far out, and difficult for leaders to prioritize a long-term play over a short-term perceived win. Foresight often feels like “it can wait.”
4. It’s misunderstood: Leaders often conflate foresight with “trends decks” or surface-level research, rather than a long-term strategic planning tool. For most companies, engaging in foresight work requires some foundational education before the real work can even begin.
5. Unclear ownership: Organizations often struggle to decide where foresight “belongs” or which budget should cover it. This can lead to a sort of “hot potato” moment – everyone agrees someone should hold it, but no one wants to raise their hand. As a result, it falls through the cracks.

Making The Business Case for Foresight

Due to these challenges, it’s not enough to simply budget for foresight; you’ll have to make a business case for it. Regardless of your industry or company, there are some proven benefits you can highlight.

1. Risk mitigation: Foresight is one of the best tools businesses have to mitigate risk. Take COVID as an example: businesses that had planned for broad displacement were able to move their teams to remote work and resume operations within days. Tracking signals and uncertainties early means fewer surprises and less exposure to costly blind spots.
2. Opportunity capture: Foresight isn’t just about finding the opportunities that already exist. It’s about creating new opportunities by analyzing what your market or operating environment will look like in the future.
3. Investor and board confidence: Company stakeholders want to know the business will be successful today and resilient for tomorrow. Foresight-backed strategies demonstrate preparedness, assuring investors and board leaders that the firm will be able to weather any storm or new paradigm that may arise.
4. Competitive positioning: Companies with strong foresight functions consistently outperform laggards in terms of ROI and margin protection. By anticipating how their environment will evolve and how customer needs will change, they stay ahead of the pack.

Budgeting for Foresight

You will need to acknowledge these challenges and advantages in presenting your budget to leadership. Your plan must address three key components:

1. The Type of Foresight You Need
   Foresight is an umbrella term for a broad array of frameworks and tools. Some firms are just beginning and need help laying the groundwork, while others are ready to integrate scenario modeling into their strategic planning. This array of activities is set on a broad spectrum of resource requirements.  It is imperative to understand what you need and then connect it directly to business impact before you begin.
   
2. The Cost Ranges
   This step will likely require some scoping and exploration alongside a partner firm. Because foresight must be specific to your organization to be actionable, no two reports or engagements are created equal. Any partner you choose will need to understand your objectives and business goals to provide you with a thoughtful recommendation and range.
   
3. The Lead Time
   Foresight requires time, not only to complete the work but also to translate and socialize it across the business. The process of discussion and consensus-building creates a positive feedback loop: when early initiatives prove valuable, it becomes easier to build momentum for future efforts.

Act Now

Before you start step one of the budgeting process, assess your organizational readiness. Has your company engaged in foresight before? How expansive is the organization’s thinking? What type of buy-in will be required to ensure foresight efforts succeed? Answering these questions first will help you build a resource plan pre-fabricated for success.

You’re in budget season now, so the time to account for foresight work is upon you. Budgeting for foresight is possible when resources are matched with objectives and efforts are connected to business outcomes. Remember: the future won’t wait for budget cycles.