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Everyone wants to be future-ready, especially in uncertain times. Inflation has hit its highest level since the early 1980s. Many technology stocks have plunged dramatically from the beginning of the year. And the pandemic has pressed into its third year, with recent lockdowns in China deepening the supply chain crisis.

Despite the volatility, the future is still arriving at an accelerating pace. Climate change, quantum computing, Web3, AI and machine learning, and the metaverse are just a few examples of the deep trends that are reshaping the ways companies innovate and compete.

These important trends offer opportunities to dream even bigger — but dreaming big does not mean escaping reality. Companies cannot afford to lose sight of their core customers and the present economic environment. Here are four common mistakes that can derail leaders as they strategize for the future.

Derailer 1: Hoping to Run Before You Can Walk

It’s easy to think that because others are doing it, you can do it too. Take the metaverse as an example. It’s becoming shorthand for describing the future of the immersive internet, where a new digital economy lives across both virtual (digital) and augmented (digital and physical) reality. Platforms like Roblox, Decentraland, and The Sandbox are all distinct metaverse platforms. Technologies that can transition between the digital and physical worlds are already emerging. For example, non-fungible tokens (NFTs) allow users to transfer digital clothing, artwork, or other purchases from one digital realm to another.

For a consumer product manufacturer, therefore, the prospect of selling virtual experiences is very real. Nike, for one, has doubled down on NFTs. It has acquired RTFKT, which creates, sells, and stores digital goods. On the online gaming platform Roblox, a virtual Gucci bag now fetches more than its real-life equivalent. Dolce & Gabbana has auctioned a $300,000 tiara that can be worn only in the metaverse. But the question executives must ask themselves is this: Are these eye-catching examples of NFT sales scalable or one-offs? How can an organization turn the emerging opportunity into a sustainable shift in business models?

Capitalizing on a new trend always takes preparation. It materializes via incremental evolution. That’s why what’s suitable for Facebook, Nike, or Microsoft might not be suitable for others.

More than 15 years ago, Nike created the Nike+iPod Sport Kit. The wireless system enabled Nike+ footwear to communicate with iPod Nano models, which predated the iPhone. Runners could measure, record, and analyze their performance.

To call such a partnership strategic is an understatement. “We’re working with Nike to take music and sport to a new level,” said Steve Jobs at the time. “The result is like having a personal coach or training partner motivating you every step of your workout.”

But it didn’t stop here. Over the next decade, Nike steadily upgraded its core capabilities as an apparel brand and built a foundation as a tech innovator with capabilities in analytics software, app development, and electronics design. With this foundation in technology, Nike was able to embrace the leap to the metaverse from the physical to the virtual world.

Nike worked with Roblox to create its own virtual world, Nikeland, in November 2021. In Nikeland, gamers can find Nike buildings, fields, and arenas and can compete in various minigames. Nike’s embrace of the metaverse makes sense from a strategic perspective, given the company’s advanced digital supply chain and its digital-first approach to direct-to-consumer e-commerce, where global livestreaming has been a major source of growth.

The implication for companies is this: Your metaverse strategy can’t exist in isolation. Don’t reduce it to a marketing sideshow. Only an integrated digital strategy will yield business impact. But you can’t run before learning to walk. Great companies don’t spring from a sudden revolution. There’s no shortcut.

It’s well known in the psychological literature that living in the future — being preoccupied with what might be — can distract individuals from being in the present. This can also affect strategic thinking. A leader must have a strong hold on the future, but even more critically, leaders must not forget the business fundamentals of the present. First and foremost is the value proposition for your core customers.

Consider JCPenney, an organization that, like many others, is slowly emerging from a pandemic bankruptcy. Its predicament can be traced back to former CEO Ron Johnson’s new strategic direction for the company. Johnson had been a retail superstar. He was widely credited for making Target hip and turning the Apple Store into a retail powerhouse. And he attempted to fulfill his new mandate at JCPenney by applying the very same approach that he had deployed in his previous jobs.

Pursuing the next big thing, Johnson started a revolution at JCPenney. He hired a team of outsiders to fill critical senior-level positions and terminated more than 19,000 existing employees. Coupons and sales, which had become ubiquitous, were to be replaced by what he called “fair and square pricing.” The stores themselves would be radically redesigned, becoming curated showcases of mini shops, arranged by brand. The new strategy made sense, especially if you came from Apple. But it also neglected the basic economic drivers of JCPenny at the time. It shuttered private-label brands, even though that operation generated 50% of sales at the time. When a colleague suggested that Johnson test out the new strategy before an all-store rollout, he rejected the idea, saying, “We didn’t test at Apple.”

Unfortunately, the revolution ended badly. None of Johnson’s initiatives resonated with the retailer’s core customers. The company lost $4 billion in sales; its share price plunged by half during Johnson’s tenure. And the damage has set JCPenny into a downward spiral that two other CEOs couldn’t revert, until the iconic retailer filed for bankruptcy during the height of the pandemic.

Finally, the latest CEO, Mark Rosen, made a reset. He refocused on the company’s existing customer base — loyal, budget-conscious American families. Rosen paid close attention to inexpensive workwear for essential workers. Coupon giveaways were brought back. That might not sound very exciting, but it’s exactly what the company needed. The JCPenney of today is still innovating. For example, it’s scaling predictive AI to increase online conversion and expanding same-day delivery. “We are loving those who love us,” said Rosen. Dreaming big doesn’t mean you can forget the needs of your core customers. They are the ones who make you who you are.

Derailer 3: Avoiding Tough Decisions and Necessary Conflicts

Insight is cheap unless it’s deployed at scale, and herein lies the paradox of future thinking. People love discussing future scenarios. What’s hard is making the final decision on what to do next. Harder still is rechanneling resources and energy behind a set of committed choices. Why? Because making good choices often requires engaging in passionate debate, executing a painful realignment of different interest groups, and sometimes disappointing stakeholders that matter.

And ultimately, someone must own the decision (and then its execution), with clear accountability. For example, employees who fit the company at one point might fit less well as it seeks reinvention. Letting go of employees who were right earlier in the business’s life cycle can be painful. As humans, we tend to employ many tactics to avoid anticipated pain — whether it be physical or psychological — and sometimes it might feel easier to avoid the conflict and stress that comes from making tough choices.

But conflicts were exactly what Disney went through as it sought to scale its streaming business model with Disney+. Years before Disney+ came online in 2019, former Disney CEO and chairman Bob Iger had been working on a series of acquisitions. He first bought Pixar Animation Studios from Steve Jobs in 2006. Marvel, Lucasfilm, and 20th Century Fox would follow.

Yet content alone would never be enough to compete in the streaming wars. Disney needed to own distribution, too. In 2017, Disney announced that the company would pull its content off of Netflix, curtailing all licensing revenues. It also added new executives with outside expertise. And, most contentiously, new metrics on subscriber growth were added, when profits and movie ratings had been the traditional measurement. Executives argued over content development, pricing, and distribution. They vied for control.

When an organization like Disney reinvents itself, executives tend to underestimate the heated debates that are required. But heated debate is natural and even healthy: Conflict can breed innovation. It’s easy to green-light a new series like WandaVision or The Mandalorian. These are family-friendly titles. But relying on child-oriented content would ultimately put a ceiling on growth. It took the latest CEO, Bob Chapek, to help push Disney+ to evolve its identity. No longer would Disney+ focus primarily on kids’ content — it would go after the adult audience directly.

When charting a strategy for the future, you can’t avoid discomfort. Good strategic choices often involve engaging in rigorous debate and owning tough decisions. That’s why it’s helpful to ask ourselves — and to check with our teams about — what decisions and undiscussable conversations we might be avoiding.

Derailer 4: Revering Only the New Star Talent

To reinvent themselves, organizations often need new talent. Sometimes this happens through acquiring another organization or establishing partnerships. Other times, organizations hire experts from other industries. (Google, for instance, has been quick to recruit blockchain experts to form a new team to catch up with competitors.)

These new star talents are often tasked with an important mission. They can be greeted with public fanfare and might be unintentionally revered and accorded a higher status than those working on business as usual. The adverse effect is that you can leave the bulk of the organization — those who are making the present possible — disillusioned and demotivated, resulting in performance declines.

What the stories of Disney and Nike also illustrate is the importance of maintaining and building on your current knowledge. Nike still makes great sneakers. Disney makes great films. It’s important to ensure that your current talent remains recognized and celebrated.

Reskilling can also play an important role here. The need to help the workforce learn and develop new skills is no mere motivational tool. Established employees can benefit from reframing their perspectives to keep up with the pace of change around them, and organizations benefit from retaining loyal talent that has a wealth of institutional memory.

The world continues to change at an unprecedented pace, leaving strategic reinvention on the minds of leaders and on the agendas of organizations. To ensure that your efforts to be future-ready are met with the greatest chance of success, it’s critical to (1) ensure that you can live up to your promises — that is, don’t run before you can walk; (2) not neglect your core customers of today; (3) be willing to make tough decisions; and (4) embrace new talent while not forgetting your current employees.

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