management planning

Managers who think about the future - which should, of course, mean all managers - are accustomed to approaching the task with logical, careful analysis of what (or so they think) is most likely to happen.

Extrapolation of the past into the future is the most common exercise, although there’s no logical reason why past trends should continue. But it sounds so reasonable. In fact, though, you can make an irresistible case for being unreasonable, abandoning the logical and likely for the deliberate pursuit of the irrational and unpredictable.

The obvious reason for so doing is that the realised future, as opposed to the anticipated one, is very often so highly illogical, seen from the viewpoint of the past, that it appears impossible to predict. There always is an underlying logic, naturally, but it looks much clearer in hindsight. Foresight is far more complex. The brilliant MIT professor Peter M. Senge has even stated firmly that ‘It may simply not be possible to convince human beings to take a long-term view’.

Their reluctance may not be stupid. It is highly likely that sudden events of a surprising character, which combine very low probability with very high impact, will shape our long-term futures, just as they shaped our pasts and presents. These events arise not from foreseen or foreseeable trends, but rather through unexpected, discontinuous, chaotic developments - and incidents. A classic and horrible example is 9/11. The jetliners which crashed into the Twin Towers literally came out of a clear blue sky.

PLAYING WILD CARDS

You may question whether 9/11 has changed the world as greatly as some politicians and pundits argue: but, as just one consequence, with huge consequences of its own, the assault on the US made the invasion of Iraq more likely. In any event, futurists now take the so-called ‘Wild Cards’ very seriously indeed. At this year’s Future scene conference, staged as usual at the Unisys Management Centre at St. Paul de Vence, many fascinating Wild Cards were played. Karl-Heinz Steinmuller of the German consultancy Z_punkt noted that such cards are vital to getting the answers to four critical, but difficult questions:

• Will the trends continue to favour our business?
• What is ‘the next big thing’?
• When will it happen?
• Can we prepare for it?

Wild Card analysis helps you to think about the unthinkable and get better answers to the four key questions. Steinmuller starts by estimating the probability of the event: then its impact: and finally the focus - where the main thrust will occur. You can also think through the probable chain reaction that will follow from the Wild Card in question. After looking at the origins of the event, you write down the predictable impacts, then propose the likely winners, and finally the probable losers.

In one of Steinmuller’s fascinating illustrations - the rise of uninsurable risks - the losing-out category probably includes all of us. His grave figures already show a sharp and sustained rise in the gigantic costs of natural catastrophes and an equally impressive fall in the proportion of insurance cover. By writing your own scenario for Wild Cards that would affect your business, you can test your central, sane predictions against the possibility that a wild one of this nature will be played.

PROBABLE, NOT POSSIBLE

For ‘possibility’ read ‘probability’; Wild Cards are inevitable. As noted, often the wildness vanishes in hindsight. The savage attack on Pearl Harbour, like the bombing of the Twin Towers, had an insane logic of its own. The insanity (apart from that of all acts of mass murder) sprang from the secondary effects that were bound to follow - arising in both cases from massive retaliation by the US.

Wild Cards always create unforeseen and great opportunities. Rearming after Pearl Harbour led to fabulously profitable military orders, whose impact on subcontractors and incomes spread beneficially throughout the economy.

The so-called ‘war against terror’ has likewise provided a torrent of gold. Always be on the lookout for such chances. But most managers are justifiably more interested in the specific gains that they can harvest from reading their own futures aright.

Here Wild Cards are a most useful adjunct. Thinking about them is most stimulating and opens up new windows on your future. You should, however, be less interested in making predictions of that future than in making things happen - and happen in your favour.

‘The bestway to predict the future’, as noted by Alan Kay, a founding father of personal computing, ‘is to invent it’ - like the hero of the following obviously fictitious story.

Put yourself in the hero’s shoes. The Wild Card of your dreams favours you - the development of a technology you understand well in ways that will undermine the existing industry with goods and services that threaten every player.

Every business will want to deploy these products whose future you see so clearly. True, nobody much shares your vision. To the industry as a whole, this is the Wildest of Cards, and your dream is their nightmare – so naturally nobody pays it any great attention.

But nothing dents your certainty that your obsession is that great and rich rarity - a truly universal product. You get your chance at mining this gold when emissaries from an industry giant arrive on your doorstep.

As a largely defensive and strategically ill thought-through move, they plan to launch a product in the area of your dreams.
You hastily offer them all the help they desire - David coming to the aid of Goliath.

But David doesn’t make the giant pay through the nose. To get the widest possible market on the most open conditions, you wisely sell your indispensable services dirt-cheap. The product duly heads off into the stratosphere, and so does your business. Eventually your massive customer, unaccustomed to sharing success, tries hard to shake you off. You hang on, until another Wild Card is played. A different giant invents a new technology that again radically changes the game - but the inventor does nothing with it, except watch while others prosper from the breakthrough.

THE LITTLE GUY WINS

Eventually, they include you. Despite a slow start, you exploit the potential earlier than your giant customer. In the battle between David and Goliath (just as the Bible says), the little guy wins. And you become the richest man in the world. That’s a giveaway to the fact that this is no fable. The hero is Bill Gates of Microsoft, and the Goliath is IBM - ably (or rather, ineptly) assisted by Xerox, without whose inventions Windows might never have taken Gates into new and higher regions of market dominance and monetary wealth.

No fable, then: but it’s still quite plainly a ‘story’. A true story, but nevertheless something that could have been imagined - and probably was, somewhere in the powerful mind of young Mr Gates. At Futurescene, stories joined Wild Cards as a relatively new, seemingly unscientific, but very cogent addition to the futurist armoury. You tell a story to help take your enterprise from where it is to where you want it to be.

Joe Tankersley of Walt Disney Imagineering stressed that stories in futurist usage are true, not simplistic, not frivolous, and certainly not ‘scenarios’. Much used by forecasters, the scenario looks at the future from different logical angles (usually three). What happens if the oil price goes to $x? Or $1.5x? Or, God forbid, $2x? This is a perfectly valid and valuable exercise that makes managers think, not only about alternative events, but about which contingency plans are required to deal with each possibility.

The technique known as ‘Best World, Worst World’ has a similar effect. What’s the best foreseeable outcome? What the worst? Can the organisation cope with either; and, if so, how? So long as you resist the unscientific temptation to take the central outcome as the most likely, the exercise should do nothing but good – for instance, in testing your investment and marketing strategies. But BWWW won’t create the best world for you. For that, a story will be far more effective, as Walt Disney found, both with the animated cartoons which are still its bedrock and in the planning of its modern business.

THE A4 EXERCISE

What the technique does is to animate the A4 exercise that I have often recommended. Take a sheet of A4 paper, and write across the bottom a succinct and brutally honest account of where the company is now. Across the top, write where you want the organisation to be at a chosen point in the future. In between write down the major steps and stages that have to be achieved to get from the bottom to the top, which will usually mean from mediocrity to excellence.

When animated by a professional story-teller, the A4 plan becomes a living document The narrative is developed until it is a cohesive, agreed depiction of the future that everybody wishes to build - to make happen. The story may concern a sub-future, one of the building blocks needed for the whole glorious future outcome. But whatever the tale you tell, always follow Joe Tankersley’s injunction; REACH FOR THE STARS.

If you’re going for a story, make it a great one, with a truly happy ending.

There are other story-telling rules. Tell one story, not several, says the Disney man. Change your story often. Ensure that it is internally consistent. Every story needs a hero - but that hero shouldn’t be technology. Embellish the story for effect. And give it away. Let others share the story-telling and contribute to a winning narrative. That many-sided contribution is going to be vital, anyway, in acting out the story in real time, as the future mutates into the present.

In my view, that message about reaching for the sky is the most important lesson to emerge from Future scene. If you under-aim, you are more than liable to underachieve. Conversely, if your aim is staggeringly high, it is amazing how much you can achieve - more, very possibly, than you yourself expected. Did it ever enter Gates’ mind that tiny Microsoft would one day be worth more than the magnificent IBM? Even if that thought did occur, it’s impossible to believe that Gates visualised the actual outcome in all its full, astonishing size - Microsoft’s market value is nearly double that of the giant which gave Gates that first crucial contract.

The actual numbers reported by Business Week on26th July are $284.43 billion for the software king and $150.56 billion for IBM. The latter also ranks well below the microprocessor champion Intel ($184.66billion), in which IBM once held a 25% stake. It’s not as if IBM has been a total failure in the new century. On the contrary, its diversification into services has won general praise. But Microsoft and Intel each had a much better story to tell and to enact - and, though both had their moments of weakness, they were saved by that once Wild Card: the digital revolution.

THE GREAT STORY

In one of those weak moments Gates was so alarmed at the mounting threat from a hostile IBM that he offered the giant an Intel-like stake in Microsoft. He was turned down. The horribly bad decision reflected the same erroneous attitude that had shackled IBM’s strategy all along. Its original story sounded so great. Tabulating machine company turns to computers and creates the industry that powers a whole new world of enabling technology: and yet IBM still has the energy to move from big machines to small, creating a PC-based computing empire of even greater dominance.

But IBM never really believed in that second part of its story. The moral for others is to create and believe your own transcendent stories while expecting and reacting to the Wild Cards which will determine how those stories unfold. Don’t let the future happen to you, in short, but do make it happen the way you want.