The Futures Wheel ~ By Mind Tools

The Futures Wheel

Identifying Future Consequences of a Change

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Identify all future consequences effectively.

© iStockphoto/rKIRKimagery

If you've ever needed to explore the full impact of a proposed change, you'll know how hard it can be to identify all possible outcomes.

In situations like these, many people panic, and list the first consequences that they can think of, resulting in a list that's shallow, incomplete, and tricky to analyze.

This is where the Futures Wheel can help. This visual tool gives you a structured way of brainstorming the direct and indirect consequences of a decision, event, or trend.

About the Tool

The Futures Wheel (see figure 1, below) was created by Jerome Glenn in 1972. Glenn has since become a recognized expert and speaker on Future Studies.

Figure 1 - The Futures Wheel

(Click image to view full size.)

Glenn originally created the Futures Wheel to identify the potential consequences of trends and events, but you can also use it in decision making (to choose between options) and in change management (to identify the consequences of change). The tool is especially useful during the brainstorming stage of Impact Analysis.

How to Use the Tool

Step 1: Identify the Change

Write the change that you need to consider in the center of a piece of paper, or on a flipchart. This could be an event, trend, problem, or possible solution.

Step 2: Identify Direct, First-Order Consequences

Now, brainstorm possible direct consequences of that change. Write each consequence in a circle, and connect it from the central idea with an arrow. These are "first-order" consequences.

Step 3: Identify Indirect, Second-Order Consequences

You now need to brainstorm all the possible "second-order" consequences of each of the first-order (direct) consequences that you wrote down in Step 2, and add them to your diagram in the same way.

Then, repeat this by identifying the third-order consequences, fourth-order consequences, and so on.

Tip 1:
You may find it useful to color-code each "level" of the wheel, as we have in Figure 1, above. This makes it easier to prioritize and analyze consequences once you've completed your brainstorming.

Tip 2:
Remember that consequences are not necessarily negative.

Step 4: Analyze Implications

Once you've completed all of the levels of the Futures Wheel, you'll have a clear picture of the possible direct and indirect consequences resulting from the change. List these.

Step 5: Identify Actions

Where the possible consequences that you've identified are negative, think about how you'll manage them(our article on Risk Analysis gives some useful pointers). Where consequences are positive, think about what you'll do to take full advantage of them.

Futures Wheel Example

Judith's departmental budget is going to be cut by 20 percent in six weeks. She gets her managers together, and completes a Futures Wheel (see figure 2) to identify all of the possible consequences.

Figure 2 - Judith's Futures Wheel

(Click image to view full size.)

Judith can now see that cutting staff will have a significant impact on her team. If she's going to work around her budget shortfall, she knows that she'll need to try every other option first. Trimming staff will be a last resort.

She can also see that low motivation and low productivity could be indirect consequences of this budget cut. So she needs to be ready to rebuild team morale, and to help people be more productive. She may also find it hard to increase sales volumes, so she needs to manage expectations accordingly.

There are also some positive consequences from the budget cut - there will be more opportunities for sharing skills and for on-the-job training in the team.

Key Points

The Futures Wheel is a simple, practical tool that helps you brainstorm the direct and indirect consequences of a decision, event, or trend.

To use the Futures Wheel, first identify what's changing. Then, enter each possible direct consequence of that change in a circle, and connect it from the central circle with an arrow.

Then, repeat this by identifying the second-order consequences, third-order consequences, fourth-order consequences, and so on.

Once you're finished, you'll have a visual map that lays out all of the implications of the problem or event, allowing you to manage the situation appropriately.

You can learn 600 similar skills elsewhere on this site. Click here to see our full toolkit. If you like our approach, you can subscribe to our free newsletter, orbecome a member for just US$1.

ROB WHEELER

Rob Wheeler is currently a Fellow at the Harvard Business School's Forum for Growth and Innovation

Groupon Doomed by Too Much of a Good Thing

10:17 AM Tuesday August 16, 2011
by Rob Wheeler | Comments (138)

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"Alright, you caught us. We're actually not making any money. In fact, we are really losing a lot of money."

This is the essence of Groupon's declaration last week that it will remove the controversial accounting metric calledAdjusted Consolidated Segment Operating Income (ACSOI) from its financial statements. ACSOI essentially measures Groupon's profits before subtracting its subscriber-acquisition costs and stock option-based compensation. The metric was an attempt to put a thin veneer of respectability on what are extremely disconcerting profitability numbers for the company. In the first quarter of 2011, Groupon posted a net loss of $113.9 million. Yet, the company reported ASCOI of positive $80.1 million. In most recent quarter, Groupon's losses continued to mount as it begrudgingly abandoned the ACSOI metric amidst criticism and incredulity from the SEC.

But what is most interesting about its emphasis on the ACSOI metric is that, deep down, Groupon knows what we all know: good investments are profitable investments. It was simply not enough for the firm to report earnings and explain that it was investing for growth. Rather, Groupon felt the need to include a metric of profitability, no matter how contrived, that was actually positive.

Clayton Christensen would agree with the intuition that Groupon displays but ignores: businesses should become profitable before they become big. The best way to manage a fledgling business is for managers to be impatient for profit but patient for growth. Such a strategy limits an early venture's funding in order to force the business to develop a profitable business model and then invests heavily in growth once such a model is identified — Christensen terms such investments"good money" for incubating growth businesses and extols the strategy for three reasons.

• First, when a business is impatient for profit, managers are forced to validate their assumptions and demonstrate that customers are fundamentally willing to pay an acceptable price for the company's offering.
• Secondly, expecting a business to be profitable quickly forces it to keep its fixed costs low. Because a business's cost structure determines which customers it finds profitable, keeping these fixed costs low preserves strategic options for the company when it is choosing which customers to target.
• Finally, reaching profitability quickly ensures that when outside financing dries up, the venture can succeed on its own.

Groupon's fundamental problem is that it has not yet discovered a viable business model.The company asserts that it will be profitable once it reaches scale but there is little reason to believe this. The financial results of Groupon's traditional business continue to deteriorate, especially in mature markets, and new ventures such as Groupon Now also have failed to drive profits. And unlike the very few successful companies that scaled before they were profitable (think Facebook or Amazon), Groupon's business model does not benefit from significant network effects. The company's product is not more valuable to users as more people adopt the platform. If anything, the fact that Groupon is witnessing decreasing revenue per merchant and fewer Groupon purchases per subscriber in its maturing markets suggests that growth may actually decrease Groupon's value to its customers. Yet, Groupon maintains a blind faith that growth will be its salvation. As Pets.com learned in the last bubble, such a strategy works just fine until you run out of other people's money to spend on growth.

The real cause of Groupon's problem is that it had too much of a good thing. With over $1 billion of venture capital money to invest in growth, what manager has time to worry about profitability? Groupon's "bad money" — investments that were patient for profit but impatient for growth — did not instill the discipline needed to enable the company to emerge as a successful standalone venture. Now, the venture capital markets cannot supply more capital and the company must depend on the IPO market to finance its money-losing operations. Eventually, investors will be unable to sell their shares to a greater fool and Groupon will be added to the list of companies that had immense potential but died because they did not find a successful profit formula in time.

The story would be much different if Groupon did not have nearly unlimited access to funding so early in its corporate life. A successful financing strategy would have provided Groupon with incremental investments to enable the development of a profitable business model around a product that had obvious appeal to customers and merchants. In such a world, Groupon would have stuck to its home market of Chicago until it developed a business model that was profitable at scale in one market. Armed with a viable profit formula, Groupon could have scaled aggressively — confident that much larger profits awaited it.

But it is now too late. Groupon needs another $750 million to keep the lights on and to keep growing while it prays for profitability that will perpetually lay just one funding round away. Groupon's venture investors and executives need a way to cash out before everyone realizes that the emperor has no clothes. I will probably buy a Groupon every now and again — I have no problem letting investors finance my cheap consumption. But as far as an investment goes, Groupon is looking about as profitable as giving away your merchandise for 90% off.

Rebuilding Morale from Mind Tool's News letter

Rebuilding Morale

Creating a Happy, Committed Workforce

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It's important to rebuild morale if it takes a knock.

© iStockphoto/lisegagne

Ted's organization has just gone through a round of layoffs, and his department has lost five team members. His team's morale has taken a big hit - rumors are flying around about further layoffs, conflict is frequent, and everyone's energy is visibly reduced.

Although people are still working diligently, Ted can sense that much of their activity is driven by fear: excitement and enthusiasm have just vanished.

There are many different factors that can affect team morale. When morale suffers, it's important that you take steps to rebuild it quickly. But what can you do, as a leader, to rebuild the morale of your team? And what exactly is morale?

We'll examine both of these questions - and more - in this article.

About Morale

According to sociologist Alexander Leighton, "morale is the capacity of a group of people to pull together persistently and consistently in pursuit of a common purpose."

For your organization to thrive, it's essential to take the time to develop good morale.

Almost by definition, organizations with high morale experience higher productivity and staff engagement, they show lower employee turnover and absenteeism, and they have a happier workforce. What's more, they find it easier to attract and retain the best talent. While "raising morale" can seem to be a nebulous goal, many of these other effects are measurable, and directly affect the bottom line.

Last but not least, it feels great to work in an organization where morale is high!

Why Morale Suffers

There are many things that can cause team morale to dip. For example:

• Layoffs and restructuring.
• Poor leadership.
• Poor communication.
• Lack of empowerment or autonomy.
• Inflexible working conditions.
• Cancellation of team benefits.
• Damage to the organization's reputation or public image.
• Losing a big contract or client.
• Difficult co-workers.
• Heavy workloads or stress, with no reward or gratitude.
• No sense of social value to the work being done, or a negative impact on the wider society.

Signs of Low Morale

Too often, managers don't realize that morale is poor. Whether or not your team or organization is facing any of the scenarios above, watch out for the following clues that morale may be slipping:

• Obvious unhappiness.
• Increased complaints about work, or other team members.
• Increased absenteeism.
• An increase in conflict between team members.
• Insubordination or unruliness.
• Disorganized work environments.
• Increased employee turnover.
• Decreased productivity.
• Lack of enthusiasm.

Leader Morale

Keep in mind that, if you're a leader or manager, your team's morale starts with you. It's up to you to be a good role model for your team. If your own morale is suffering, then it's vital that you work on rebuilding your own outlook and attitude first.

Start by identifying why your own morale is low, and then come up with ways to adjust your mental attitude.

Often, this starts with action. For instance, perhaps your morale is down because your boss is pressuring you to do a good job, and is threatening to fire you if you don't perform. You can make yourself feel more positive and in control of the situation by getting organized, and by achieving measurable goals that will put your boss at ease.

Work on rebuilding your self-confidence. Remember, your team is always watching you: if you're feeling positive and confident, they will too. Quick wins will also help build confidence - for you, and your team.

You might also want to take our quiz, Are You a Positive or Negative Thinker? This helps you understand and change how you think, so that you can interact with your team in a good way.

Team Morale

If your team's morale needs rebuilding, there are several strategies that you can use. However, just as you did with your own morale, you need to start by understanding the problem. This helps you choose strategies that best fit your situation, which may include:

1. Reconnecting With Your Team

Morale is higher in situations where team members feel close to their managers. You can create this type of environment by developing good relationships with your team, and by reconnecting whenever possible.

Practice Management by Walking Around so you can "touch base" with team members often. With regular contact and communication, you can reestablish trust and rapport with your team.

It also helps to develop your emotional intelligence: the better you can sense the emotions and needs of those around you, the better you will be as a leader.

Keep in mind that lack of appreciation is often cited as one of the root causes of low morale. So, do whatever you can to show your people that you appreciate them.Reward your team by saying "thank you" for a job well done, or by offering benefits such as extra days off, or flexible scheduling when key goals are met.

You'll also want to give everyone regular feedback on their work. (See our article onfeedback - once a year just isn't enough!)

2. Developing Your Team

Another way of improving morale, especially after a round of layoffs, is by helping people develop their skills.

So make sure that you're offering your people opportunities for learning and development, as a way of helping them feel more secure and committed to the organization.

You can do this by understanding their developmental needs, and by usingTraining Needs Assessments to make sure that everyone is properly trained.

Cross-Training is another great way of building morale, and improving productivity, just as long as you explain why you're doing it. (Some may see it as a sign that layoffs are on the way!)

Tip:
Our How Well Do You Develop Your People? self-test will highlight all of the ways in which you can train and develop your team.

3. Improving the Workplace

Sometimes, morale can suffer because of the physical environment that your team has to work in.

Take a look at the offices, conference rooms, and break rooms that your team uses. Are these rooms safe and clean? Is the air quality good? Are the rooms bright and energizing? Do team members have the tools and resources they need to work effectively? Do what you can to improve the offices and other rooms your team uses every day.

You can also use Herzberg's Motivators and Hygiene Factors to address the factors that cause dissatisfaction in your team.

4. Improving Communication

Poor communication can be another common root cause of low morale.

Rumors can spread quickly in the workplace, and these can destroy morale. This is why it's important to give people accurate, timely information, especially if sales are down, or if the company is restructuring or downsizing. (Just make sure that your communications are coordinated with those of other managers.)

Identify ways that you can keep your team in the loop. Perhaps you could send a weekly email with important updates, or devote a few minutes in your regular meetings to keeping people up to speed with what's going on. Communicate fully with your team, and explain how any changes or decisions will affect them.

Remember, the flow of information should go both ways. Encourage your team to come to you any time they have questions or concerns. Listen actively to what they have to say, and respond in a timely manner to problems or suggestions. If rumors do begin to fly around the office, address them immediately.

5. Setting Measurable Goals

Morale can fall when your people are unclear about what they should be doing, or what your expectations are. This lack of direction is disheartening, and disorienting.

Make sure that your people are aware of your organization's mission and vision, and of how their work contributes towards these. Understanding these gives members of your team a clear and (hopefully) inspiring view of what the organization expects, and helps them think about how they can use their own talents and skills to fulfill the organization's mission.

Next, look at the tasks and responsibilities of each team member. Set SMART goalsfor everyone on your team using Management by Objectives and KPIs - having clear, achievable goals will help to motivate people, and will help them know what they should be doing.

6. Rebuilding Confidence

Perhaps your team just lost an important contract or project. If this is the case, people's confidence may be shaken.

Learn how to build confidence in other people. One great way to do this is to give them more autonomy to make decisions. Delegate tasks and responsibilities, and push them to work towards challenging but achievable goals. And when someone on your team has a success, celebrate it!

7. Focusing on Talent Management

If times are tough for your organization, you might have a problem keeping your best people, or enticing good new people to join your team. This is another reason why rebuilding morale is so important: if morale is reduced, your most talented team members are likely to be the first to walk. (After all, they'll find it easiest to get new jobs.)

Use talent management strategies to ensure that your people stay interested in your organization. For instance, use job crafting to make sure that their roles use their talents and skills fully.

8. Keeping People Motivated

Once you've rebuilt morale, it's important to keep people motivated so that your team can reach its objectives. If you're unsure how to do this, take our How Good are Your Motivation Skills? test - this will direct you to some great resources.

Also remember that morale can be affected even when times are good. Regularly look for signs of low-morale, and revisit the strategies above when necessary.

Key Points

Team morale can suffer for many reasons, including downsizing, poor leadership, poor communication, or difficulty with co-workers. If you suspect that your team's morale is not what it should be, there are several strategies that you can use to rebuild it.

First, focus on your own morale. Then identify why team morale is low, and choose appropriate strategies for rebuilding it. These can include:

1. Reconnecting with your team.
2. Developing your team.
3. Improving the workplace.
4. Improving communication.
5. Setting measurable goals.
6. Rebuilding confidence.
7. Focusing on talent management.
8. Motivating your people effectively.