Efforts to forecast our future fall short of a perfect dream where events can be weighed and measured with the predictability more commonly found in cookbooks the world over. If predictions could be made with the same degree of certainty that a baker employs then where would we find the creative drive to innovate ? In an increasingly uncertain world is it even possible for random acts of genius ? Can we embrace chaos and harness its power ? The paradox is that to plan for the future we must discard the limits of our present. When we accept this seeming contradiction the need for a stable hand is clear if we are to successfully identify the sea that acts as the ultimate source of attraction.
Uncertainty, fear, and expectations
In the dark heart of the jungle you discern a rustling of the leaves. Fearing that a tiger shadows your steps you immediately scale the nearest tree for the relative safety of the high branches. From your new vantage point you suddenly comprehend that it was only the sound of the wind and breathing a sigh of relief let the fear wash away. If however the sequence of events was inverted and you assumed the steps of the tiger were nothing more than the whisper of the wind through the trees you would no longer exist because you would be dead! As with all survivors that inhabit our planet we are preconditioned to instinctually fear the worst and assume that there are tigers lurking behind every unexpected movement of the leaves (see Michael Shermer, The pattern behind self-deception).
Firmly planted behind your desk the uncertainty lurks in everything you do. Every newspaper you read, each radio broadcast you hear, every television program lighting up your screen consists of a series of events that while anticipated often fail to materialize. They are mere echoes from a future that will never arrive. Catastrophes and successes are unexpected and often arrive suddenly without warning. You are given over to reflecting on the impact the subprime crisis is having on your current portfolio or the unplanned stopover in Los Angeles that came as a result of the volcanic cloud over Iceland. Suddenly paralyzed by fear you convince yourself that a tiger lurks behind random events and make the decision to place a hold on your investments, withdrawing your resources to hunker down and revert to basic survival mode, convinced that a major catastrophe is imminent.
At this point a retreat into the safety of the world as represented by a reassuring cookbook version of events seems more and more attractive. We would know which ingredients to obtain, how to combine them, and the method of preparation. If only life were more like a recipe !
In his work Penser l’incertitude (Planning For Uncertainty), Pierre Gonod, a close associate of Edgar Morin, has constructed a system of classification that rests on the identification of four distinct types :
- “Type 1. Predictions formed on a deterministic and quasi-mechanistic basis. These phenomena operate on the certainty principle and consist of processes where the laws of transformation or the mechanisms of change are quantifiable and explicitly understood.(…)
- Type 2. Predictions formed on a random or stochastic basis. Here as well the mechanisms of change follow laws that are understood and can be explained through verifiable equations. The correlations and elasticity coefficients allow for the prediction of alternative futures along with the probability of their occurrence. (…)
- Type 3. Qualitative certainty paired with quantitative uncertainty. The general orientation of strategy when the processes are understood but remain subject to the impact of a varied array of unpredictable factors that could affect various outcomes.(…)
- Type 4. Total uncertainty both qualitative and quantitative. It is impossible to form any reliable prediction for the future”
When applied to the models currently employed by modern enterprise the framework undergoes a slight shift in orientation and emerges as follows:
- There are scarcely any examples that remain of Type 1: We operate within closed feedback loops where the frequency and scale of the interactions make it close to impossible to predict what will happen with any degree of certainty. When the type is encountered at all it can only be applied to short-term forecasts.
- Predictions belonging to the category identified as Type 2 can serve as little more than short term models whose usefulness is expressed in workaday solutions like budgeting: For a long time accepted wisdom was that strategy could be based on three to five year projections, the length of time traditionally thought to represent the limits of what could be accurately predicted. Probabilities, contingencies, and a framework for the future were thought to be discernible over this limited period but this myth has been permanently shattered. At best we can make some informed guesses about the future that fall well short of what is required for making accurate predictions.
- Type 3 phenomena have been in the ascendant and currently dominate strategizing when it attempts to move beyond the realm of short-term thinking: This could be called the world of possibilities. Here it is possible to conceive of an idea that has a chance of success, trim it of any unnecessary contingencies and define the limits of our creations so as to draw some definable path to a specific goal and predict with some accuracy the route that will lead us there most efficiently.
- Type 4 events can be defined as unpredictable randomness. There is no fixed point from which to initiate strategy and therefore no conclusions to be drawn in advance. We will only know what the future looks like when we have reached it and are looking backward over what we have experienced.
At this point it may seem appropriate to ask whether it would be better to simply live from day to day than to continue making increasingly futile attempts to predict how the future will appear. Should we simply surrender to the instantaneous forces in our struggle derive advantages from them? Where are we heading anyway? We’ll know soon enough. We will go where we can.
And yet, for lack of a more positive discourse, the entire world will continue to see phantom tigers lurking behind every shadow! Can we really play with billions of euro of investment as if it was our weekly stake in the national lottery drawing? Should strategy be consigned to the forgotten dustbin of modern management theory?
If the answer to these questions is a resounding no then how can we advance and discern a way forward ?
Does the river know where it flows ?
Leaning against the railing of one of the many bridges that traverse the River Seine, the Pont Mirabeau you cast a sidelong glance at its flow and attempt to understand where it all leads. Getting nowhere from your perch overlooking the river you descend from the bridge and stroll along its banks as it twists to the right here and weaves to the left there. You soon throw in the towel as it suddenly dawns on you that the river has a mind of its own and defies your attempts to comprehend its wandering ways. In fact it would seem that the river hasn’t any more of a clue about where it is heading than you do.
But in fact, the river knows very well where it is going. It is a river after all and like all rivers is attracted by the irresistible pull of gravity and the distant sea or ocean. But which sea? The answer is determined by the internal logic as defined by the river’s drainage basin. The river knows where it flows but do we? How will it arrive at its destination? Again for the river the answer is self-evident: it will adapt to its surroundings. If it should happen that the level of water suddenly rises the river will overflow its banks and spread out to exploit paths that were previously out of reach. What will endure however it the simple fact that the water will eventually reach the sea.
Whatever happens along the way, water has been flowing to the sea since the beginning of time and will continue to do so evermore. But while the river is eternal our understanding of its properties is constantly evolving. What is the rate at which water is lost through evaporation or infiltration? What is the precise trajectory of the river and how much time must elapse before it reaches its destination? While these questions are useful they quickly lose their appeal when we attempt to understand the true nature of the way things are.
It was ever thus and to truly comprehend the significance of the River Seine observe less what it does and take the time to truly comprehend “what the river is” and “what drives its continued existence”. When these realizations wash over us a more complete understanding of the river will swiftly follow. As we cast an eye over the river’s domain we will soon discover that the sea casts its influence over everything. Instead of allowing ourselves to be distracted by things as they are in the day to day jumble of nature avert your gaze from the present as it represents only confusion and prevents us from seeing the bigger picture. The sea is the force that acts as the ultimate point of attraction and the surrounding water is evidence of this simple fact. As with the attractors that populate the world as defined by Chaos Theory, the source of the attraction may remain nebulous but what really matters is the direction from which the force is being exerted because everything eventually converges around a fixed point. It is a structurally sound system with a fixed and identifiable point of focus.
When management teams use the present as a basis for formulating strategy they are laboring under the illusion that the future is knowable and predictable if only we can gain enough insight into what has happened in the past or is happening now. In doing so they are making the very same mistake in degree and perspective as we would in trying to understand the River Seine from our vantage point of a Parisian bridge. If strategists view the future through the eyes of the present and believe that any reasonable margin for error can be smoothed over through shifts upwards or downwards in the inputs that govern their current hypotheses they will more often than not come up short in the planning department. As in Chaos Theory there is no evidence to suggest that any limits can be imposed on the threat of uncertainty which looms over all.
To know where the River Seine is heading one must look beyond the present and identify the sea that acts as the ultimate source of attraction. Where are these vast oceans? Somewhere in the current of the future…
To construct a coherent strategy for the future the questions remain the same and the answers equally mysterious to the untrained observer.
The shortest route to the sea
To begin, one must reflect the true nature of the sea. It represents a basic and eternal need that will remain regardless of the direction our society takes. Taking the long view, the sea governs every aspect of our lives and will remain a powerful force of attraction whose waves will forever reverberate outwards to govern the evolution of mankind. The metaphor becomes useful when we observe and attempt to understand the significance of the essential components of our social ecosystem such as beauty, communications, leisure, transport, food, and the laws of attraction…Or even the indispensable forces that drive the growth of modern society such as our need to transport natural gas or the efficiently manage waste products.
The more direct and fundamental our attachment to an essential component of our lives the more the attraction remains powerful and stable in the same way that the sea remains deep and vast.
Before stopping to ask yourself whether the previous statement is too fuzzy and vague to be of any practical use consider the following and be reminded that these theories did not evolve in isolation and can count among their adherents the leaders of the most innovative companies on the planet.
Evidence of this fact can be found in the statement made by Google CEO Eric Schmidt in June 2009 (See Inside Google: Eric Schmidt, the man with all the answers) “We don’t have a big picture. We don’t have a five-year plan, we don’t have a two-year plan, we don’t have a one-year plan. We have a mission and a strategy, and the mission is… you know, [to organise] all the world’s information. And the strategy is to do it through innovation. It doesn’t bother us if something doesn’t work. Because we understand that something else will work.” The choice made by Google is evidence of the influence of another sea. The need for information is as eternal as the river’s flow toward the sea. Innovation itself represents a sort of sea as well. Innovation will always exist even when the technologies created through the eternal marketplace of ideas become obsolete.
In 2001 when a crowd gathered at Apple HQ for the launch of the iPod Steve Jobs set the stage by declaring, “Why music? Well, we love music, and it’s always good to do something you love. More importantly it’s part of everyone’s life. Music has always been there and will continue to be there. This is not a speculative market.” This is a far cry from the wooden business plans of the past that came fully loaded with a mountain of figures, a web of predictions, and an endless stream of spreadsheets.
If you were granted an audience with the Executive Committee of L’Oreal and were to request an explanation of what makes the world’s largest cosmetics company tick you would more likely than not be confronted by a disarmingly simple response. They are in the beauty business and fulfill the desires of women, and increasingly men, to look their best. They would define the boundaries of the vast ocean in which they operate as following a definable coastline of skin creams and cosmetics, hair care products, and fragrances. Contained within this domain are products to satisfy three of the five human senses: sight, touch, and smell. At Nestle the mapmakers of the future are carving out similar spheres of influence which lie between the twin shores of health and nutrition (and are equally coveted by competitor Dannon). Similar dynamics play out in other areas of the economy whether it is in the habitat and construction sector as exemplified by French giant Saint Gobain or Air Liquide, a world leader in the production and management of gases for industry, health, and the environment.
Once the sea emerges from the fog and can be identified clearly the only step that remains to exploit a resource it to pose a deceptively simple question that arrives in two halves:
- Which challenges will need to be surmounted in order to successfully tap into the life giving sea?
- Having identified the challenge how is it that one enterprise is better equipped than its competitors to create an original solution to the obstacles that might prevent it from fully realizing a resource’s potential?
Why is it essential to answer both questions in order to illuminate the course the path will take? Because whether your enterprise has the capability to fully exploit the true power of the sea will depend entirely on your response. If your answer is anything other than a resounding yes on both counts then the best advice would be to move swiftly on to the next adventure and forget you ever laid eyes on a particular sea!
A case study: testing the financial viability of 3G networks from inception in 1998 and extending over a ten year period?
I would like to present an example from my personal experience in order to illustrate the points that were made in the preceding paragraphs. In 1999 I led a study into the potential that existed for the construction of a comprehensive 3G network over a ten-year period.
At the time of our study very little information or data was available and we were sailing blind into uncharted seas:
- The actual performance of 3G networks was as yet untested as the technology was in its infancy,
- The internet was still experiencing its own growing pains and very few services existed to fully exploit the new technology,
- No target audience existed on which to test the new technology as the general public was completely cut-off from comprehension of even the most basic assumptions of the conversation we were attempting to initiate..
Where to start? It was impossible to use the contemporary world as a model. There existed no points of reference, no history, and no year zero. We were operating in the dark and blessed with a completely clean slate. We were compelled to beat a retreat and move closer to familiar shores in order to better trace an outline of the potential existence of calm and welcoming seas around the next bend of the coastline. To create a map for the future we asked which of our existing challenges could be eased or resolved through advances in the spread of 3G networks.
For the consumer market we plotted a course that would allow end users to enhance their experience in the following ways:
- Communication: to enter into contact with one or multiple individuals for simple exchanges by using text, images, and video. This satisfies a basic human need for safety in numbers as a protection from the law of the jungle.
- Information: satisfying the human thirst for knowledge as derived from our constant need to satisfy the twin desire for understanding of our environment and a lens through which to view and interpret events. At a more fundamental level information improves our basic chances of survival.
- Commerce: Conducting transactions and the acquisition of goods. This implies far more than a simple exchange of information and can include consumer research and the solicitation of advice. In some cases the actual act of making a purchase is merely an afterthought. Whatever the context, the buying and selling of goods is an integral part of our social instinct and reflects the basic human desire to consume in order to survive.
- Leisure: For distraction, amusement, or simply passing the time. We have also included audio and visual entertainment in this category. Games and play occupy a central role in the history of human development and laughter and joy remain a defining characteristic of what it means to be human.
We conducted an investigation into the enterprise market using similar parameters.
Finally, we posed some more practical questions. What would the handsets look like? What dimensions would display screens take?
Leaving aside any technical or physical limitations we arrived at a classification based on three definable circumstances in which the technology was likely to be used: while walking, while seated at home or in the office, and while seated in some external environment such as a hotel room or train carriage. If I am moving on foot it is essential that the screen be adapted to fit a hand-held device. For the second scenario the possibilities are virtually limitless but in the third example it is essential that the technology be portable and easily packed. Extrapolating outwards to the physical characteristics of the device three formats began to emerge: hand-held, flexible, and notebook sized. Taking into account that these three scenarios will always exist in some form or other we were confident that the underlying logic of our framework would remain as valid in the future as it is was at that particular moment in time.
Our next step was to match screen dimensions to the four types of experience users were seeking and to ask ourselves the following question: What definable advantages could be derived from a permanent high-speed internet connection that 3G technology could make a reality?
While the limits of non-disclosure prohibit a finely detailed explanation of the conclusions we were able to draw from our study we can in clear conscience discuss the implications of our data on the creation of models that allowed us to meet the needs of our target markets as defined by the classification system. Additionally, we were able to evaluate the financial viability of our development strategy. At no time during the process were we working from a model that represented the world as it is. What really concerned us was defining a clear vision that would remain a guiding light whatever the situation. We endeavored to illuminate the future.
Looking back at the evolution of the technology over the years that have passed since our initial analysis much of what we originally predicted has indeed come to pass. After the launch of a plethora of services and applications, most notably with Apple’s iPhone, we have found that our original typology remains as valid now as when it was created. This should come as no surprise when we understand that the four categories we identified were indeed seas of attraction to which all subsequent development would flow like a stream. While their existence is today taken for granted it took a considerable time before the fog began to lift and the outline of their banks began to emerge. When we initially charted the new frontiers the process was neither rapid nor smooth which is why it pays to heed the warning that when planning for the long haul one rushes to conclusions at one’s peril!
Stable leadership is the key to smooth sailing in an uncertain sea
The need for a long term commitment to employee development represents one of the great paradoxes for the leaders of enterprise in an uncertain world. Strategy must be based on the future rather than the present. The present is an illusion that masks treacherous currents and freak storms. We should never forget that the world with which we are so intimately familiar was never a foregone conclusion. It is merely one of many paths that could have been taken to bridge the gulf between today and yesterday. It has become our present only because of a series of linked events that congealed to form a unified whole in an on-the-fly jumble of construction. Of course we assume that it was ever thus and always will be but any slight alteration of the playing field could have led us to a present unrecognizable to our eyes.
If we are unwilling to look beyond the comforting assumptions we draw from past experience and become caught in a routine that is dictated by contemporary reality and experience than the future become nothing more than a simple extension of what we already know. We will draw a Maginot line in the sand that keeps us stuck in the past and stifles creative approaches to development. It would condemn the watch making industry to a life without the new direction as represented through the playful approach of the Swatch and would limit us to simple improvements on cell phone keypads rather than real bursts of genius as embodied by game changing technologies such as Apple’s iPhone.
In order to provide a coherent course for the future we need to chart the destination to which the river flows and when we’ve identified the sea we will have found the path of destiny.
Mapmaking can be a tedious exercise and requires the patience and stability to steer the correct course. The unfortunate reality is that modern enterprise is plagued by a revolving door approach to management and is constantly subject to the whims of its shareholders which has led to a retreat into the safe world of numbers where everything can be predicted according to finely tuned mathematical models. The result is a dearth in the ranks of management of thinkers capable of truly understanding a company’s core business as well as its customers. Leaders who lack a thorough historical understanding of the business they are trying to lead will find themselves stumbling as they attempt imagine what the future might look like. An endless stream of data and statistics can provide reassurance to directors and shareholders, but serve as no substitute for a more intimate understanding of the terrain in which an enterprise operates. To think otherwise would be to risk drawing a mental Maginot line in the ground that does nothing to create security and only upholds an illusion of it.
This leads us to another expedition in search of the enterprises that have succeeded in creating long-term growth and innovation. Observing the factors that led to their success one cannot help but be struck by the fact that in most cases it is the companies that invest in creating stability for shareholders and management alike who are in the rudest health. The best examples can often be found in companies that are privately-owned or retain some sort of family presence in the boardroom. These organizations have been more successful than most at avoiding the perils presented by changing tides and have made winning bets on the future by steering a stable course and following it unflinchingly on a day to day basis.
A stable crew is a captain’s most reliable protection from rough waters. Stability can illuminate the swiftest route to the sea and allows one to navigate it successfully. The constant tension between order and chaos that beats at the heart of modern enterprise can become like the Yin and Yang of ancient Chinese philosophy as long as there is consistency in management. To be strong is to embrace uncertainty and learn to love it, and even rely on it, in order to meet the constant challenge for survival.
Hope rests on uncertainty
To move beyond self-defeating fear of uncertainty is to cease to see tigers lurking in the shadows of every dark corner of the forest. If we embrace our gaps in understanding we can open up a path through the brush that will allow the multiple undercurrents of our existence to congeal and adjust to each other. The space cleared would create fertile ground for the future of global economic growth. If we flea from uncertainty we are our turning our backs on our best possible hope for promoting life, increasing our chances of survival, and ultimately developing the resilience necessary to ensure our continued survival. Running from uncertainty is to run from the source of life itself.
If the management team at the helm of a given enterprise becomes obsessed with the elimination of uncertainty and focuses its energies solely on the creation of accurate forecasts decision making becomes flawed. If strategy is based on a phantom reality that may never come to pass then leaders are steering against the stream from which all life flows and will endanger their chances for success.
For management to embrace uncertainty and harness its considerable energies requires a willingness to develop a deep and lasting appreciation of the prevailing currents of the sea in which it is operating. Staying the course through the construction of innovative and resilient strategy that is capable of weathering whatever storms may lurk on the distant horizon will allow companies to seize opportunity as it presents itself. These are the ideas I have developed and expanded upon through my work Les Mers De L’Incertitude (Uncertain Seas). To run with the current of life will only strengthen enterprise and ultimately ensure value for all.
As we survey the constantly shifting landscape that stretches out before us it is useful to ask ourselves whether the view would be nearly as spectacular in a world stripped of all uncertainty. If we pause for a moment and fully consider the implications of a world in which nothing is left to hazard or chance it may dawn upon us that it would be a frigid, soulless place from which the spark of genius would flare rarely if at all. Would not professionalism and creativity lose their value in this colorless world? What would distinguish one competitor from another if everything could be predicted in advance? It would be like playing high stakes poker with the cards dealt face up and on clear display to all. In such an environment what would be the interest or even purpose of ever playing the game at all?
Once and for all it is time to cease to see the tiger’s breath rising from each hidden corner of the forest and take the lesson of Jean-Paul Sartre “I prefer desperation to uncertainty”, as stated in The Devil and the Good Lord and turn it firmly on its head. Indeed, without uncertainty what a desperate world it would be!
Les mers de l'incertitude : Diriger en lâchant priseRobert Branche
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Neuromanagement : Pour tirer parti des inconscients de l'entrepriseRobert Branche
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