March 28, 2017

How to Successfully Predict the Future … and Still Fail to Impact it

If you successfully identify the future consequences of contemporary actions, and no one acts on your prediction, does it matter?

A senior manager developing an internal strategic foresight program recently asked me to identify some cases in which people ascertained the future outcomes of actions in the present. He wanted to know what methods they used.

Great question. And one that futurists hate to answer because there are so few examples with measurable results: How do you prove in a probabilistic universe that one path taken was more profitable, or less disastrous, than one never taken? Not easy to show outside of a model.

So here’s one way to do it. Look at the consequences of badly-calculated actions, in multi-faceted, complex situations that were predicted, and how much they cost:

  • From 2004 to 2006, there were many voices warning of a potential Iraqi insurgency against invading Coalition forces (they are well recorded now in books such as Tom Ricks’ Fiasco and George Packer’s Assassins Gate).  As they predicted, the insurgency happened.
  • People foresaw the housing market crash in 2008 (foresight dramatized with great flair in Michael Lewis’s book-cum-movie The Big Short), although it has been pointed out since that there were few who made the connection to the financial crisis it portended. As they predicted, the housing market crashed.
  • One need only remember Al Gore’s powerful campaign to alert the world of the potentially cataclysmic effects of human-caused climate change. As Gore predicted,  the consequences of climate change have continued apace.

These cases make it clear how much wise forecasts can be worth: trillions of dollars and boundless human suffering.

But only if someone acts on them.

A Commitment to Act is Critical

There is one more important characteristic of these examples.  They weren’t acted on; alternative courses were not taken. (Although, of course, climate change has also been accepted and acted on, by relevant decision makers.)

The alignment of envisioning future impacts and action is what makes the  most famous example of forecasting, at Royal Dutch Shell (now Shell) in the 1970s, so powerful. In the highly-cited case, an in-house futurist team created scenarios demonstrating how oil prices might rise and supplies fall, if oil producers might use the oil market as a proxy for geopolitics. Unused to straying into tangential domains such as politics, this was an unusual thought.

However, it was considered plausible by the oil company’s leadership. As a result, Royal Dutch Shell reallocated its investments and took other measures that helped it weather potential shocks.

It is this — the readiness of company leadership to explore deeply the implications of potential changes, and to take proactive steps to address them—that is striking and unique. Moreover, the company considered various alternative futures in relation to each other in order to place their strategic bets.

Culture and Process: Vital components

In an organizational setting, the most vital “method” of all is engendering a culture in which leaders and their futurist team can communicate well, and building a process infrastructure in which future considerations inform current decision-making.

Without these, it doesn’t matter what methods were used to arrive at plausible future scenarios, because they won’t be acted on in any event.

But those who are looking into the future and those who are making decisions today are not always motivated in the same way:

  • There are few incentives for leaders or managers to seek long-term sustainability when short term rewards (and punishments) hang in the balance.
  • Analysts of the future are likely to be dispassionate about their findings which does not mean they don’t care what happens (those who stood to profit from a housing market collapse, or who had to lead American troops in Iraq were hardly uninvolved).  Rather it means that they are more dedicated to hearing what present evidence tells them, than to a particular answer.  Those who are committed to this accurate future act in what Philip Tetlock, head of the Good Judgment project, calls “perpetual beta” mode — they continuously update their forecasts based on new evidence or strong additional or alternative reasoning.
  • Leaders, in contrast, have necessary commitments to external parties, and to the politics that take place on the border of the organization.

There are many good methods available for structuring an analysis of future impacts of current actions.  These will serve best, though, in contexts in which people have committed culturally to the importance of alternative future visions, and structurally to the processes to integrate foresight into strategy and decision making.

The Strategic Narrative framework offers one way to begin building organizational consensus that current actions and future impacts are not only connected. Strategic narratives connect your past to an unfolding future in an overarching vision, or “story,”  through present actions.  From within this logic, it becomes clear that considerations about the potential future are an important form of feedback for courses of action in the present.

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