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The future's not ours to see

Author: sean welham

For Millions of years we humans have been busy planning. From the moment we started making simple tools, and hanging out in groups around our newly discovered fires, we have been visualising future goals and devising the necessary steps to achieve them. It is this ability to consider and anticipate the future, in a speculative theoretical sense, that differentiates us from all other animals.

Along with our capacity to think and plan came the requirement to make assumptions. The need to surmise what events we expect to occur that will have a direct impact on the plans we are making. For example, when our ancestors planned a fishing trip they assumed that the fish will be found in their usual location and in sufficient numbers to guarantee a satisfactory catch. They assumed that the weather will be kind and the sea would be calm. And so on and so on. They made these assumptions based on their collective experience and knowledge. They extrapolated from the past and projected into the future. In the majority of cases this worked just fine. The past was generally a good predictor of the future, and in any event, it was usually the only guide they had. Of course these days we are much more sophisticated.

Planning for Business

It is an article of capitalist faith that every business needs to operate to a plan. A formal declaration of what is expected to be delivered in terms of sales, profitability, etc and how these will be achieved. In some businesses, more effort goes into producing the plan than into any other endeavour (including executing the plan). The resulting output is used to secure finance, allocate resources, and devise incentives. It is, in many ways, the single most important document that a business produces.

Explicitly or implicitly, baked into every plan is a range of assumptions; the general economy, competitor activity, customer demand, technological changes etc. These assumptions are, for the most part, straightforward extrapolation of recent history and in many cases are unspoken. The truth is we really haven't evolved much in our sophistication when it comes to imagining the future.

Avoid the Pitfalls of Prediction

In a well known study, in the 1960's, two Canadian psychologists discovered that, just after placing a bet, gamblers are much more confident of their selected horse's chances of winning then they are just before placing a bet. Commitment increases confidence.

Once you are formally tied to your prediction you not only believe it to be the right choice you actively look for supporting evidence. In fact, you may even try to avoid information and interpretations that challenge your prior beliefs. This is a cognitive disorder known as confirmation bias. In business this is a bad thing.

So how do you keep an open mind while forcing yourself to make specific predictions and assumptions?

  1. Firstly, make sure that your assumptions are widely circulated across the business. Everybody needs to know what is being assumed so as they can challenge you or suggest alternatives (and in any future event they can't claim they didn't know!).
  2. Secondly, prioritise your assumptions on two dimensions; probability of occurrence and impact to business. Agreeing on these dimensions is as important as agreeing on the assumptions in the first place
  3. Thirdly, create 'tripwires' around each assumption. Make sure that alarm bells start ringing the moment something significant is starting to shift.

This simple process will create a shared vision of the future while divorcing individuals from the pressure of 'guessing correctly'. It can help you to react rather that rationalise. Planning assumptions are not about being right or wrong; it is about reducing your vulnerability to surprise.

Beyond the Expected: Think like a bookmaker not a gambler

Planning assumptions are based around a best guess of the future. By their very nature they are somewhat narrow in scope. A business, after all, can only operate to one plan. Beyond the expected future there is an indeterminate range of possible alternatives. While it is impossible to plan for multiple futures it is possible to think of your Reponses to them. Scenario planning is the big brother of planning assumptions. It allows more use of imagination and is less tied to expectations; it also looks out further and helps you think long term.

To conduct a scenario planning exercise is to look over the horizon and consider a wide range of possibilities and then to ask the question 'What if?' It is to think of the most unlikely futures and understand how they will affect you and what you can do about them. Just as a bookmaker will look at every possible outcome of a horse race and ensure that even the most unlikely result is still covered, a smart business will understand the range of risks it faces and have a response prepared.

I have met many destitute gamblers but have not yet found a poor bookmaker. Covering a range out outcomes is a better long term strategy than placing a big bet.

 

About the Author:

Sean Welham specialises in increasing businesses capabilities in marketing and strategy by designing and delivering bespoke in house programs that link robust academic concepts with simple but effective tools. Sean divides his time between the Europe, Asia and the US where he advises senior business leaders, coaches' high performance teams as well as delivering numerous specific programs for many of the world's largest and most successful companies. Contact him via his website http://www.seanwelham.net

Article Source: ArticlesBase.com - The future's not ours to see

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