Hello, world. Welcome to our new blog. In this space we intend to launch an ongoing, entertaining, frequently updated dialogue about the inherent uncertainty in human events, and what organizations can do about it.
There seems to be a feeling abroad in the land (and the business world) that the future is a formless void about which nothing can be known. The “new normal” of generalized upheaval in the economy, politics and security, and even technology, intensifies this tendency towards resignation. In a technical sense, it’s true: there is nothing we can know with absolute certainty about the future. But this realization causes many otherwise intelligent and energetic people and organizations to abandon any serious attempt to deal with future uncertainty. Many simply fall back on straight-line extrapolation from the past, and comfort themselves that a numerical approach somehow adds to the accuracy of the prediction.
That’s too bad. Because it is possible to deal with future uncertainty in a systematic way, a way that does not paper over or assume away irreducible uncertainty, a way that actually will not only help you to identify risks and opportunities, but that can also help to create a more sophisticated and useful mindset about the future within your organization: scenario planning.
The scenario approach does not extrapolate from the past. Rather, it asks what elements of your external environment are critical to your organizational fortunes. It does not obsess over probabilities; rather, it simply varies these critical environmental factors systematically against one another, presents managers with these altered circumstances, and asks them what strategic insights occur to them, what risks and opportunities arise, and what actions ought to be taken in response. Scenarios avoid the “Most Likely Future” cul-de-sac which inevitably results in a very detailed picture of the future…which is more likely to be wrong the more detailed it becomes. Yet a picture of the future devoid of detail would be useless for planning purposes.
How do scenarios deal with this inevitable tradeoff between accuracy and usefulness? A short answer might be “systematic, aggressive humility." For a longer answer…well, watch this space. We plan to make it worth your while.