My main engagement today was to present on the application of complexity theory to forecasting to a group of senior clients of Grant Thornton in Johannesburg. In the build up I was asked a series of questions about forecasting and the future to which I sketched out a hasty response. The marketing firm they work with did an excellent job of crafting those notes into a press release following the event. Good enough that I have copied it intact (with permission) as today’s post.
Interestingly I got a note from Sonja while I was in Austin earlier in the week saying Do you find if they call you a Futurist. My response was I’ve been called worse but I might have been better being a little more explicit. The main message I was delivering was that under conditions of uncertainty forecasting was more about understanding the evolutionary potential of the present and intervening to nudge things in the right direction than creating forecasts. I also talked about the differences between forecasting, backcasting and side casting in foresight work.
I’ve always liked presenting to South African audiences as they have just the right level of cynicism to care. Today was no exception and I hope you find the release interesting.
South Africa must find African specific solutions to its challenges – Professor Dave Snowden
‘Real time monitoring and response needed to manage global volatility and uncertainty’
“The biggest world-wide issue is income disparity and resource starvation”
16 March 2016
Whether business is impacted by technology disrupters or the economic, political and social turmoil faced at home and across borders, planning future strategies is becoming more difficult and requires new methods of thinking.
That’s according to internationally renowned Professor Dave Snowden, who shared his insights on complex systems thinking and how you could identify weak signals in a complex environment at a workshop with business leaders, in association with Grant Thornton. To help provide an understanding on how to better plan for the future, Snowden presented to nearly 100 senior executives at the audit and business advisory firm’s Johannesburg office on Wednesday 16 March.
Snowden told business leaders that South Africa is not exempt from the problems that affected global business. He, however, argued that the country does have additional hurdles in the form of security, political credibility and the ability to sustain industry and large scale employment of the current workforce, along with the need to develop the skills for the future.
“The cultural richness and natural resources of South Africa should be its strength, but at the moment they seem to be a weakness. South Africa needs to create a strong African solution to its problems, not be a pale imitation of the US or Europe,” he said.
Professor Dave Snowden is founder Chief Scientific Officer of Cognitive Edge, which has a presence in South Africa, and he is also the founder and Director of the Centre for Applied Complexity at Bangor University in Wales. His international expertise covers both government and industry looking at complex issues relating to strategy and organisational decision making.
Among the issues that were particularly relevant to the global businesses context, Snowden cited the refugee crisis and the growth of political intolerance in Europe and Africa; global warming that was heavily tied into social pressures; and the increasing inability of growth based economic models to allow a sustainable ecosystem.
“However, overall I think the biggest world-wide issue, and it is getting worse, is income disparity and resource starvation. No one seems to be addressing either of those in a realistic way. These issues require constant monitoring and planning.”
He argued that in order to deal with this increasing volatility and uncertainty, in relation to decision-making and strategy, organisations need to shift more to real time scanning and short parallel safe-to-fail experiments in near real time to see what is possible in the present. This would require a dynamic reallocation of budgets and more use of collective and distributed intelligence.
Professor Snowden added that in monitoring for the next strategic surprise, whether an opportunity or threat, while trend data is critical for both “forecasting and back-casting”, he felt that it is better to think about how organisations could influence those trends or “seize the day” when an opportunity to radically reshape events presents itself.
“History is full of turning points and fortune in those times favours the brave and the prepared. That means you have to be able to spot the opportunity early, which involves deploying both automated and human sensors that can spot and respond to weak signals before they become visible to conventional scanning processes. Blind spots are inevitable, so increasing the cognitive diversity of your human and automated sensors is vital,” said Snowden
Professor Snowden argued that times of economic crisis also tend to coincide with paradigm shifts, the times when the previously dominant set of ideas appear to weaken and the opportunity arises for a new model to take hold. Focusing on evolutionary potential and emergent trends in the present, over rigid planning for an unpredictable future is particularly beneficial in opening our attention to novel possibilities for ways of doing business.
Professor Snowden said that tried and tested best practice tools for planning such as trend identification; forecasting and scenario planning remain relevant, but that they are not sufficient in the current volatile environment.
“There is a danger of throwing these out because they fail in complex environments, while in environments which are more ordered and stable they have considerable strength,” he said. “In a sense it is the wrong starting point. The first question should be what type of system, what level of volatility are we dealing with, and thereafter the right tools or process can properly be selected”.
“It is important to look at future usage of these best practice tools by organisations,” Professor Snowden continued. “Scenario planning for example has great value for those who go through the process as it can get them thinking in a wider sense but I am less sure about the output of the process for people not engaged in it. The documents tend to get lost in filing cabinets pretty quickly.”
He said statistical forecasting and trend analysis remain powerful as long as executives act on their results and that that monitoring and updating take place in near real time when the situation becomes more volatile.
“A lot of managing uncertainty is less about forecasting the future, more about better understanding and management of the present to make favourable futures more likely,” he said. “That includes the ability to rapidly identify new pathways. Forecasting processes can often blind people to new pathways if they are slavishly followed or hard backed into budgetary processes.”
Snowden argued that the future of the knowledge economy lay in governments creating an ecosystem in which SMME’s and community enterprises could flourish and continue to operate in the poorer areas rather than just leaving them to ‘battle’ along on their own. He suggested government should not outsource core social services – as is being done with prisons and healthcare in the UK – to large international companies who are generally as bureaucratic but less accountable.
“I think the large companies and professional service firms also have a crucial role to play there,” he concluded. (963 words)
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Issued by Strat Comms Advisory Services on behalf of Grant Thornton South Africa
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