Using Foresight to Model Next Order Scenarios During and After COVID-19

In her speech and conversation with Stuart Crainer, Amy Webb says the purpose of strategic insight is to spot risks early enough so that you can either mitigate or turn the risks into opportunities. This moment in time is analogous to a car spinning out of control on an icy road. Our brains love and recognize patterns. When you are in a car that is spinning out of control, your brain recognizes the pattern, “if A, then B” that is, if you slam on the brake, then the car would stop spinning. However, that applies where A is only one possible variable and B is only one possible outcome. The problem is that is rarely ever true and especially not in case of a slippery road. For the equation “if A then B” to be true, it would take us knowing the exact thickness of the tyre, we would have to know exactly all the mechanics in the car at that particular time, and we would also have to have comprehensive knowledge of the road and the ice ahead of us, and we would have to be able to calculate simultaneously all of those data points in order for that equation to be true. That is not possible, and in fact, you lose more control by slamming on the brakes because the equation is false. The mathematical way to express this is “if A, then infinity”. There are infinite number of possibilities because there are an infinite number of variables over which no one has control. This tells us that in that particular moment, the best thing to do is to lean into uncertainty. Future-proofing” is a misnomer as it gives people the sense that somehow, they have got all the control. No one entity ever does, so the trick is not to make any predictions or future-proofing, but rather to create a state of readiness within your organizations. Instead of trying to control the future, it is better to lean into the uncertainty, and if you do that while keeping your eyes focused on where you want to go, which means acting both in the immediate term while thinking about the longer-term, then you can start to exert some control over your situation. Amid this crisis, we are dealing with a crushing amount of unknowns, it seems as though the data points are shifting all of the time, and it is just like a car spinning out of control. At this time, every organization is in triage mode, they are focused only on treating this current emergency and see no point in planning for the future. This is why we are seeing different data points and different models. These models can guide us in making better decisions but they are not definitive because of lack of data. Nevertheless, through these models, people are hoping to get some answers. All of the things we have seen in the corporate world throughout the past years are also analogous to the slippery car. Many established companies have reached their end in the past, a classic example of which is Blackberry. It is because when there are so many signals of change happening around them, most companies, especially mature ones, retrench; they double down on their cherished beliefs rather than leaning into uncertain futures. So, if A, then there are many possible choices. In a world that seems completely uncertain with an infinite number of possibilities, there are a couple of things we can do. The first thing is to not worry about predicting the future. It is mathematically impossible to accurately predict every aspect of the future. Likewise, “future-proofing”, which has suddenly come in vogue again is a dangerous myth. In order to future-proof an organization, we would have to know every single input and output, have complete control over external variables, and have an evolutionary algorithm of sorts working and powering the organization in order to make it that nimble. “Future-proofing” is a misnomer as it gives people the sense that somehow, they have got all the control. No one entity ever does, so the trick is not to make any predictions or future-proofing, but rather to create a state of readiness within your organizations. This cannot happen automatically; it has to be done. It seems pointless to work on the far end of the time cone at present as we do not even know what would happen with coronavirus or when would a cure be discovered, but we do have inputs that describe what could be next, which means that if we are willing to reorient our thinking, we can find incremental actions to take in each of the areas of the time cone. Strategic foresight tools 1. Time Cone: Most organizations, when thinking about the future, think in a linear way. For a lot of companies, especially large ones, three years into the future is a very distant time. The problem here is that if we agree that there are all of the external variables continually shaping different bits and parts of the world, then three years is not a distant future. Three years is more like the present, things you have to be deciding on and thinking about right now. A timeline simply marks the units of time between established actions that have to be taken, but that does not get you thinking in a broader and more comprehensive way about all the different signals and all the things that happen in the future. So, futurists in my organization do not use timelines, but something called the time cones. The output here is to reframe your orientation to time so that you have a clear understanding of how to take incremental actions. The time cone represents years and certainty on the axes, and it represents actions and workstreams in the interior space. At this current moment in time, we have the most data and to the degree that we can be certain about anything, but the further out in time we go we have less data and less evidence, and therefore less certainty. But we can still take action for the future. The types of actions that we can take would just be different from what we would take in the present day. In the present time, we can make tactical decisions like budget allocations, reorganizing the workforce, auditing vendor relations, and auditing the brittleness of supply chains in the case of multinational companies. These can be used to feed strategic planning. Many organizations go through an arduous strategic planning process and the end result tends to be a sort of marketing document. The challenge is that there is a tension between wanting to articulate what the strategic actions are going to be and not making promises that cannot be fulfilled. The problem with the strategic plan is that it is too must be nimble. Most organizations get stuck between tactic and strategy. One also has to be working on the long-term purpose, the vision for your industry, your company and your team within the organization. No one can know every single detail of the future but you can clearly articulate and gain internal alignment on what your vision is of the future. That should serve as a plan for how everything evolves. If you are not defining the far-end of the time cone, someone else will, and that makes you vulnerable. It seems pointless to work on the far end of the time cone at present as we do not even know what would happen with coronavirus or when would a cure be discovered, but we do have inputs that describe what could be next, which means that if we are willing to reorient our thinking, we can find incremental actions to take in each of the areas of the time cone. 2. Axes of uncertainty: It must be acknowledged that most organizations and teams think far too narrowly about their own future, by only looking to their competitors or only the trends within their established field of view, for instance. This sets you up for disruption because you fail to see all the externalities that impact you. Part of the reason for using the axes of uncertainty is to slow down the process and not go straight from analysis to scenarios to strategy. If we do that, our cognitive biases would play in, and we would think too narrowly. The goal, therefore, is to identify combinations of externalities that could influence your future, so that you can see plausible future states you may not have seen before. The first step in using this tool is to brainstorm all of the things over which you have no control that you are curious about. It is impossible to make a comprehensive list but it can be an exhaustive list. It is best done with a cross-functional team in the organization, and some experts outside the organization may also be included. The next step is to express the uncertainties or binomials. So, the uncertainty around Covid-19 can be expressed with two options- Option 1, a mild pandemic recurs every year and Option 2, Covid-19 is contained in 2020. In the real world, there are many possibilities out there and more than binomials, but the point here is not to be comprehensive but to try and look around the corners to help us think differently about the future. Sometimes, it is difficult to generate a bunch of such sets of uncertainties, so a thinking framework can be used. A lot of certainties tend to fall into four buckets - economic, social, technological and regulatory, and political uncertainties. Other adjacent areas particular to the topic can be added, like food consumption and the future of work in the case of the Covid-19 pandemic. The third step is to create a list of internal certainties, so these are all of the known variables within the organization. For large matrix organizations and large multinational organizations, it may be tricky because the unknowns within your team may not reflect unknowns in other teams, so this is a good opportunity to gain alignment. Some of these variables can be CapX investment, workforce training, new product launches, strategic plans, etc. The fourth step is to select two uncertainties and map them on opposing axes of a graph. This would give four combinations of possibilities and therefore four future states. Nevertheless, these are not scenarios but crumbs of ideas that would go into generating scenarios. In this way, we are leaning into the uncertainties in a methodical way using as broad a mindset as one can muster. Having thought through different scenarios, we can go back to the time cone and see what each of the scenarios tells our company at present about our tactics, our strategic planning and our vision, and our evolution for the entire industry. The answer is not necessarily a dystopian hellscape, however, it is good to recognize risks and opportunities earlier. The last step is to label each one of the possible future states or the quadrants on the graph as near-term opportunity, long-term opportunity, near-term risk, long-term risk, and the uno category- the existential risk. This tells you where to start looking for incremental actions. Meanwhile, the long-term risks identified can be plopped on the time cone to decide on in five to six years of time based on data and evidence, and whatever models we can possibly build. This then gives us an opportunity to reverse engineer back to the present day some kind of action. Part of the reason for using the axes of uncertainty is to slow down the process and not go straight from analysis to scenarios to strategy. If we do that, our cognitive biases would play in, and we would think too narrowly. At the end of the day, the purpose of strategic insight is to spot risks early enough so that you can either mitigate or turn the risks into opportunities. It is not to predict the future but to create a state of readiness within the organization. Whether a small or a large organization, you have to get into the habit of seeking out uncertainties often and building axes for your organization. Stuart Crainer in Conversation with Amy Webb Stuart Crainer: Who are the people best equipped to lean into uncertainty? Amy Webb: Within large organizations, the assumption is that the people best equipped are the R&D people, but one of the smartest people I’ve ever known was a mid-level finance manager at a huge company and what made him so special is that he was wired against cherished beliefs. He was very analytical and questioned the veracity of everything. He was curious and asked questions like, “How do we know this is true?”, “Where do we get more information?”, “If we turn this whole thing upside down and backwards, then what would happen?”. The key characteristic is just the insatiable curiosity and bravery in being willing to say, “I don’t know, but we’ve got a framework and we have a plan,” which is something I don’t see senior executives doing enough. Stuart Crainer: Isn’t one of the issues that future-proofing the organization sounds certain and exciting whereas getting into a state of readiness sounds dull? Amy Webb: Absolutely, and I think we all get that. We all fundamentally understand that it takes a certain amount of discipline to soldier on. One of the smartest and best CEOs and C-suite teams that we have worked with to this day is a group of people who run a massive telecommunications company and it deeply impressed me that they were always willing to say “Tell me more,” “I don’t know,” “I’d like to figure this out,” “I’ve never heard of this technology, person, company, let’s figure out a way to learn more,” and then they followed through because it is not enough to just express interest and then not do anything about it. They were dedicated and disciplined, and that does not take an MBA, or special training; it just takes a decision. You have to decide that’s the way you want to be and that’s the way you are willing to lead, because if you lead like that, then your organization is going to follow. If you are skittish, your organization is going to succumb to organizational anxiety and you’re going to start making bad decisions. Stuart Crainer: How many companies actually engage in this kind of activity regularly? How many companies that you visit are actually good at it? Amy Webb: We are busy anyways but we are particularly busy right now because there’s a lot of desire for our skill-set. I did this study where I was looking at the correlation between strategic foresight within the organizations and the emergence of new technologies. Future work has roughly a hundred-year-trajectory and H.D Wells first suggested that futurism become an academic discipline and there were a couple of tracks over the past century. Rand formalized it within a large organizational setting and then Royal Dutch Shell innovated and built model scenario planning, so, at a lot of very large organizations, there are people who do this work. They tend to be in business insight groups, the chief strategy officer’s groups, sometimes marketing, and they’re not all methodical. A lot of them, unfortunately, are tethered to projecting very near-term futures but there is an increasing number of organizations that are doing this work the right way, which is prioritizing both the near and the long-term simultaneously. There is a ton of this activity in the Middle East, the Canadian government is engaged in this, and Finland is probably the global leader in foresight work, at a country level. Because of the virus, every single strategic plan has to be rewritten, so I think that this is going to spark some more interest in strategic foresight done not by using gut or speculation but by using a method and data. Stuart Crainer: Futurism is a discipline that was very popular in the 1950s and ‘60s, but then there came the oil shock of the early ‘70s and then it went out of fashion, at a time when everything was uncertain. When it was needed, it seemed to go missing. Amy Webb: In my understanding, Pierre Wack and Peter Schwartz actually did see the oil shock in advance. It’s one thing to identify the longitudinal trends, signals, scenarios, and give a recommended strategy, but you have a decision to make. You either have to go all-in on that and then be willing to make adjustments or the work doesn’t matter as much. Stuart Crainer: What are the attributes you look for to validate signals? Amy Webb: There is a methodical process. We have a tool called wheels of disruption, which is our 11 sources of change. We use that to create network maps showing connections between emerging trends, different areas that we are tracking and then looking at all of that through the lenses of public health, education and geopolitics. Then the signal map is a matter of doing a ton of active research and then finding nodes, making connections between those nodes and observing the relationships as it helps us understand where we see emerging signals and trends. Stuart Crainer: How do you find time to read so much? Amy Webb: I have my day divided into 20 minutes increments which I call units and then I have calculus to figure out exactly what my day looks like. Before doing anything else, I set aside three to four hours for active reading. It involves reading and actively taking notes and using the tools along the way. Stuart Crainer: Any closing thoughts that you would like to leave us with? Amy Webb: I believe we have agency. I believe every company has the ability to plot out its own future but if you don’t actively do that, then somebody else is going to define the future for you. You have a shot to create the future state you want but it takes work and you’ve got to be willing to do it. I’m pretty hopeful about the future, even though right now everything looks hopeless.

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Using Foresight to Model Next Order Scenarios During and After COVID-19

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