Yahoo! Could’ve Bought Google Twice, But Didn’t. Why?

The corporate world prides itself on vision, yet most firms stumble not from lack of execution, but from lack of foresight. In most boardrooms today, “future-proofing” has become a sort of mantra – discussed regularly and widely, but as it turns out, often not extensively. The irony is almost palpable: most executives say their discussions of long-term strategy occupy less than 5% of their time.

A recent reminder from the World Economic Forum, that organizations around the world are not ready to face the future shocks, is thereby not a revelation, it is an indictment. A year in which every week brings fresh geopolitical tensions and supply chain fluctuations, as well as a rapidly accelerating foray into AI as markets evolve, companies hooked on quarterly forecasts are like poker players staring at their own chips, blind to the dealer

A Lack of Vision

Corporate executives become fond of telling each other how “strategic” they are, yet mostly, that strategy all too easily becomes nothing more than tactical fire-fighting: cutting costs when profitability is squeezed, repurchasing shares when shareholders pout, acquiring startups when innovation stalls. Not foresight, that. They’re simply reactions.

Strategic foresight does not refer directly to predictions either. It is the craft of systematically scanning, stress testing and rehearsing many possible futures – scenario planning with teeth. This has long been institutionalized in major oil companies such as Shell to get some idea of how climate policy, adoption of new technologies or geopolitical realignments could transform energy demand in coming decades, for example. Comparatively, while foresight as a slide in the annual strategy offsite remains prominent in a majority of companies, as an enactment that requires daily exercise, it is still mostly insufficient.

There are several instincts that keep organizations shortsighted:

• Quarterly capitalism: Boardrooms and CEOs priorities are often centered around maximizing the next earnings announcement, not the next decade’s. Resilience is far less appreciated than predictability by most analysts. This causes tunnel vision.
  
  
• The efficiency cult: Lean operations are something that consultants love, yet this leanness often comes at a cost – eliminating buffers that cushion the impact of shocks. A just-in-time supply chain, for example. In 2020 they turned out to be just-too-late.
  
  
• Overconfidence bias: Executives work on the basis of previous success. The level of toleration in storms grows into a mantra – until it is a completely different storm. Digital cameras did not come out of the blue and beat Kodak; it ignored them willingly. Yahoo! had the opportunity to buy Google not once, but twice – they did not.

The New Foresight Imperative

Foresight is unequivocal not just because of turbulence, but also owing to the pace and interconnection of how these shocks are transmitted. In Detroit, an auto plant putting out a product could come to a standstill because of a cyberattack in Taiwan. Brussels can reconfigure patterns of data flows in Bangalore with a small regulatory tweak. Thinking ahead now necessitates systems thinking: not only in the direction your industry will develop, but in the convergence of other fields into that industry.

This does not imply creation of a crystal ball forecasting department either. It implies inculcating foresight into organization DNA. The most successful companies put foresight on the model of risk management: decentralized, fractal and incentive-based. An example is how Mastercard set up a team called “Signals” to scavenge weak signals in the political, tech and social worlds, bringing it directly to product and compliance conversations.

So what is the lesson of this to business leaders-in-training?

• Think like portfolio managers: Make bets towards the potential futures instead of playing all the chips on the so-called base case. Scenario hedging does not mean not deciding, it is controlled adaptability.
  
  
• Rage against the time frame: If your company looks at a 1-year horizon, stretch it to five. If it looks at five, ask for fifteen. The goal is perspective, not fidelity.
  
  
• Institutionalize dissent: Groupthink, more often than not, tends to impede foresight. Play the devil’s advocate. Incentivize contrarians. No company was ever forced into bankruptcy because somebody had the brain to pose an awkward what-if.
  
  
• Assess efficiency, but also resilience: Directors are crazy about ROE and EBITDA, but they do not monitor flexibility. Just think what a quarterly report would be like, which had a resilience index on top of financial metrics. Investors would laugh – but only until the next shock.

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Incorporating foresight is more about culture than the tools. Leaders need to give space to naive questions, to practice unrealistic situations, to practice an act of bravery proportional to humility. And it is not easy in organizations that are addicted to certainty. Just as in chess, or cricket, it is not the quickest brain who wins, it is the mind that thinks five moves ahead. Not all of the disruptions are going to be blocked by strategic foresight either. But more often than not, it turns the odds. It normalises shocks into rehearsed plays, crises into pre-mapped pivots. For MBA students soon to occupy a boardroom, the grim reality is as follows: the biggest competitive advantage of the next decade is not going to be scale, data or efficiency – everyone will be pushing on those fronts. It will be institutionalized fantasy.