Sheila Moorcroft, Research Director
28 June 2011
Research published some years ago highlighted 4 different levels of uncertainty. The first three were ‘manageable’ in the sense that they could be bounded by different options and possible or even likely outcomes, using scenarios. The fourth level was far less knowable, and far more uncertain. The author sees more level 4 type situations emerging, and that the financial crisis has been and should be a wakeup call about risk and uncertainty and the need for new tools and techniques; that foresight and especially scenarios remain a relatively under used tool in strategy development.
Why is this important?
Managing complexity and uncertainty needs a range of tools, new approaches and skills which are often undervalued in organisations, where a strong focus on analysis and data squeeze out and undervalue more ‘divergent’ forms of thinking and seeing the world and its potential. Divergence is about thinking differently, looking at the potential of tomorrow rather than analysing the reality of today. It is a skill set which is critical to foresight and future success, but often undervalued according to new research launched on June 29th.
Scenarios certainly draw on divergent skills – they are often visual, tell stories, ask what if? not what. But other skills include the ability to draw analogies, to learn from parallel examples – such as Intel’s decision to supply lower cost microprocessors to lower end PCs after many years resisting such a move: the parallel was the mini steel sector where suppliers started at low value end of the market, and migrated upwards to capture large parts of the high value markets too.
Innovation is seen as critical to survival. In its early stages it is about challenging current thinking, seeing the problem or opportunity in new ways, redefining the options and ideas to find new solutions. Again, highly divergent thinking.
Strategic flexibility requires the ability to challenge accepted beliefs, be aware of and integrate a range of diverse emerging – and therefore also highly uncertain- signals, even redefine the business if necessary – have a vision of what could be, rather than what is.