The High Risk of Blind Assumptions
If you think predictions are unreliable, try your assumptions
The insights within the Aries de Geus' article “Planning as a Learning" are even more critical today than when he wrote it back in 1988. In it, he notes the real purpose of effective planning is not to make plans but to change mental models that decision makers carry in their heads. He had observed that "the level of thinking that goes on in the management teams of most companies is considerably below the individual managers’ capacities". This issue is still very much as alive today as when de Geus wrote his commentary 30 years ago.
One approach is to outline a heroic vision of the organisation's future and hope that collective momentum carries the team toward the goal. That may have been the intent of the Royal Bank of Scotland's chairman when he suggested in 2007 that they now had "an unparalleled set of opportunities and [that] their realisation will allow us to continue on the impressive growth trajectory that has characterised RBS over the past decade.” Less than 12 months later they received part of the UK Government's £50bn GFC bail-out. Clearly, they overlooked critical signals in the wider environment, though individual managers may well have been acutely aware of potential trouble ahead.
So perhaps a better approach is to engage a futurist to assist by outlining the key trends and drivers that will likely affect the business. This at least gets the organisation thinking beyond the purely operational, but at the same time, it can overload the team both with information and potential options.
These statements of bold intent or perpetual acquisition of information tend to reflect a misconception about the future. How it will play out depends almost as much on our collective understanding and response as it does to the external forces over which we have little control.
The future is not just a point in time but a psychological space defined by the individual assumption we hold. By examining our assumptions we also highlight our assumed futures which can be tested against potential trends. This can be accomplished by asking strategy team members to each note down a statement they regard as true about their future. Colleagues are then invited to write the exact opposite of the statement and reflect on evidence that can support their counter view.
I might, for example, feel that vertical farming will never be commercially viable when considered against its traditional alternative. Examining opposite perspective (i.e. vertical farming will become viable) forces me to think of why I may be incorrect in my original assertion through an examination of the underlying elements supporting the potential counter-trend. This particular example, both for and against, was covered in a couple of recent. In the first, the writer scathingly dismissed the concept is on various grounds including energy intensity, real estate pricing, and production capacity. In a subsequent article, the writer acknowledged they may indeed be wrong as the data behind a number of those supporting items was changing. How many times do we some similarly lock strategic assumptions into a plan, but then fail to test them on an ongoing basis through good scanning?
Identifying assumptions won't solve all our problems but it does provide a vital first step to delivering robust planning. Continual testing that enables the organisation to be alert and responsive to change is a great start to build an agile strategy. Our assumptions may indeed be proven correct, but failing to continually examine them in the light of new trend information, introduces a high level of strategic risk.