Future Savvy: Quality in Foresight

Continuing the theme of financial types talking to each other about predictions and predictability, this ‘Tea with the Economist’ interview of Stephen Roach, Chairman, Morgan Stanley Asia by Economist New York Bureau Chief Mathew Birk, carries interesting lessons about the limits of prediction.

Birk commends Roach for being one of the few to have predicted the Credit Crunch problems, to which Roach demurs in saying he was “too early”. He then furthers his modesty in saying that the “breakage” in the financial system was “in excess of anything I envisioned.”

Self-deprecation in assessing one’s predictive abilities will endear anyone to me. Even Roach, who later in the interview burns this hard-won credibility by laying the blame for the credit crunch at the door of regulators, forgetting how hard financial institutions lobbied regulators for greater freedoms in the 1990s.

But I digress. The predictive issues the interview raises are as follows. Issue one: it’s not enough (as any stock short-seller will confirm) to get the direction of a future change right. One must get the timing right too. Issue two: it’s not enough to anticipate a change. One must be able to judge it’s impact. Getting either timing or impact wrong is effectively to have missed the future.

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Probability

On the latter topic — the problem of impact — Nassim Taleb is unrelenting, and he is right. Analysts routinely mix up probability and impact. They think that because an event has a low probability (‘it would be a 10-sigma event!’) it can be marginalized in the predictive number crunching. Of course, it can’t. The low-probability of a wildcard or black swan event is irrelevant because when it happens it will change the game, and that’s why, in every predictive situation of reasonable complexity and uncertainty, using statistical extrapolations (regressions and so on) to predict, is to dangerously paper over the cracks. It is precisely the cracks that businesses and policy makers need to worry about.

Determining the direction of change is hard enough. Assessing timing or extent of impact — a ‘total future impact index’ — is wickedly difficult. It’s a task not to be underestimated, and to simply extrapolate current trends (= assuming the trend’s timeline and impact stay the same as in the past) is the royal road to underestimating it.

This is the reason foresight for complex, uncertain, changing situations can only be grasped by NOT predicting (quantitatively or otherwise) but by exploring the limit-conditions of the plausible (What would happen if the timing of the change accelerated, or was significantly delayed? What if  the impact was 10x or one tenth of what we expect? And so on.)

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One of the benefits of scenario-based future thinking is the ‘permission’ to think through alternative future outcomes without necessarily predicting them. ‘Predictors’ focus, by contrast, on isolating the highest probability future in order not to have to think through or plan for less likely outcomes.

Predictions of the dollar’s demise are as old as the greenback itself of course, but over recent weeks the specter of the dollar heading way way below its trading range — a dollar crunch — has entered the zone of the credible, or, in scenario terms, the ‘cone of plausible uncertainty.’ That means decision-makers with lots at stake are taking it seriously.

Like the British pound, the dollar has been under a cloud due to perceptions of economic fallout from the credit crunch and global recession, but particular questions about the US currency have recently surfaced, driven by reports [Robert Fisk's 'The Demise of the Dollar' story in The Independent (Oct 6)]  that “Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council” (Saudi Arabia, Abu Dhabi, Kuwait and Qatar).

The subtext is far from merely financial. Practically, it would mean that on any day, the real cost of oil to US consumers and businesses would go up or down depending on the strength of the currency. This is something America is not used to. But, more deeeply, dropping dollar-denomination of oil is a direct shot across the bows of Washington’s say over oil affairs, and the hegemony of the dollar as the dominant global reserve currency.

De-dollarizing oil would not in itself push the US currency below its 25-year range. But it is portentous of the clear trend to a genuinely multi-power world, for better or worse, in which the dollar will get no favors. That will push the dollar down, at least while the news and fallout make their way through the financial and real economic systems.

Rumors of de-dollarization have been hotly denied, as further reported here, but as the Independent points out, denials are to be expected, and are always issued in these situations. They mean nothing. Even cub reporters know that.

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Scenario thinking

What’s particularly interesting to me is that a ’scenario’ of dollar demise has become not only plausible in the mainstream view of the future, but scenario thinking is being used as a way to consider the nature of this outcome, and how best to respond without predicting the outcome either way. As recently as directly pre-credit crunch, the media question would have been: ‘what is the best prediction for the dollar (or the housing market, or credit default swaps?) and that, rather then scoping out the implications of the lesser-likelihood, would have dominated the discussion.

So, what struck me forcefully in the Business Week video interview above, where BW Chief Economist Mike Mandel interviews the news magazine’s Economics Editor Peter Coy (see Coy’s underlying story here), is how the less-likely, non-predicted, but very significant outcome is actively addressed:

Says Coy: “It’s so hard to know what the dollar is going to do. We don’t argue that we know… what we do is we say, ‘it could happen’ and let’s take that possibility seriously, in the same way we should have taken the possibility of falling housing prices seriously…”

This is not formal scenario-building of course. But it is, fundamentally an adoption of the framework, saying in the classic ’scenarios’ way: “we can’t predict if it will happen or it won’t, but if it does it will have significant impact. So let’s just ask: ‘what if ‘ it does and explore the outcomes and our responses. What will the word look like? What would be the implications, the knock-ons and spinoffs? If it comes to pass, what would be wish we had done today?”

Perhaps failing to predict the credit crunch has dented predictors’ halos enough to cause a mini-zeitgeist-shift towards the only real way to cope with important uncertainty: exploring all outcomes that pass the plausibility and significance test, whether or not we actually believe they will happen.

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Samuel, L., Future: A Recent History, University of Texas Press, 2009

I recently received a copy of Future: A Recent History to review. True confession: what hit me first on picking up the book was (a) “wow, the title Future is not already taken!? And (b) what a fabulous job the University of Texas Press has done producing this book. It is beautifully designed, with an understated Art Deco motif, and carefully laid out with enough text on the page, on delightfully solid paper stock.
It may seem odd to go on about text on the page, but it’s much easier to read like an adult, in paragraphs. So many books, particularly business books, these days appear produced at 14-point, double spacing, like pre-school readers. Makes you wonder…

Anyway, author Larry Samuel’s project is to investigate the history of views of the future from 1920 to the present. (The book has an acknowledged US-centric focus, partially defended by the notion that future-mindedness is “a principle strand in America’s DNA.”) He organizes the book chronologically into six periods between then and now, and shows, with interesting examples, how each period had its own views of the future, and how the views shifted from period to period.

In tracing the history of “tommorowism,” in this way, Future is on a similar track to the classic book in this field: I.F. Clarke’s The Pattern of Expectation 1644-2001 (Jonathan Cape, 1979). It ultimately makes similar points, although Samuel’s argument is obviously drawn from more recent examples. As Samuel puts it: “A look back on how people looked forward reveals that while it possesses certain common themes … the future is not a fixed idea but a highly variable on that reflects the values of those who are imagining it.”

Happily I can say this chimes exactly with the argument of Future Savvy, particularly Chapter 4 “Zeitgeist & Perception,” where I argued how heavily the nature of the present and its topical issues frames how the future is seen (what is forecast, what is aspired to or feared, what counts as a valid method for thinking ahead, and so on). Which means the framing conditions of the present  should be carefully analyzed in assessing the validity of any future view.

Historiography

Historiography – investigating the meta-conditions surrounding what is recorded and how it is interpreted by historians – what counts as “history” and for whom –  is a well-understood part of doing good history. Unfortunately, there is no equivalent standard “futuriography” in the foresight field, despite it being absolutely fundamental to understanding the value of our own predictions as, similarly, highly determined by the epistemic configurations of their production. It is here that Samuel very competently fills a much needed gap.

The practical implication of this, which Future does not get into – it’s not that kind of book – is that to make better predictions (or make valid assessments of others’ predictions) we need to ask stiff questions as to how much of what we foresee is determined by the perspectives of today, and expect the answer to be “very much.” Understanding the limitations and biases of our own perspective is the sine-qua-non of a robust view of what tomorrow will actually bring.

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Peter Bernstein, the author of “Against the Gods: The Remarkable Story of Risk,” died recently at the age of 90. In memoriam McKinsey Quarterly reposted this recent Bernstein interview. I put it up here because it’s a timely and timeless lesson in thinking about uncertainty and threats, and avoiding simplistic (quantitative) approaches to managing them – one of core themes of “Future Savvy.” Bernstein offers and endorsement of real options and explains why sophisticated Long Term Capital Management (LTCM) mathematical models to control risk created “a math dependency” that was blind to, among other things, unexpected systemic feedback to its own emergence:

One of the first things Bernstein says is that risk implies that we don’t know what will happen, which could be good things happening too. Risk management, as it is currently understood, gets executives to look at what could go wrong in the uncertain future of the enterprise. (Somehow threats are easier than opportunties to get departmental budget for.) The standard approach is to break risks down into commonly understood threat categories: a typical analysis would illuminated risks posed by technology failure, communications failure, security failure, natural disasters, accidents, or market/reputation risk, liability risk, financial/credit risk, and so on. This negative-outcome identification is typically followed by strategies to monitor, minimize, or control the risk event or its impact.

Doing all this is great, BUT it is just a narrow part of enterprise and industry foresight. Why? First, industry foresight or futures studies for business is focused as much on the opportunities change offers as on threats. Second, foresight tools (when correctly applied) set themselves the task of enlarging perspectives or mental maps so that we can see more things, or more possibilities than the generally expected set (whether good or bad). Set against this, risk management is little more than the catalog of known threats. The unknown or poorly understood threat, or unseen opportunity missed (and grabbed by others) is likely to be more damaging to the enterprise.

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Strategy and Management guru Gary Hamel recently had things to say on the WSJ blog about how management needs to evolve, as follows:

Says Hamel, “The experience of growing up online will profoundly shape the workplace expectations of “Generation F” – the Facebook Generation. At a minimum, they’ll expect the social environment of work to reflect the social context of the Web, rather than as is currently the case, a mid-20th-century Weberian bureaucracy.

“If your company hopes to attract the most creative and energetic members of Gen F, it will need to understand these Internet-derived expectations, and then reinvent its management practices accordingly.”

He cites 12 work-relevant “the post-bureaucratic realities” that tomorrow’s employees will use as yardsticks in determining whether your company is “with it” or “past it.” These are:

1. All ideas compete on an equal footing.
2. Contribution counts for more than credentials.
3. Hierarchies are natural, not prescribed.
4. Leaders serve rather than preside.
5. Tasks are chosen, not assigned.
6. Groups are self-defining and -organizing.
7. Resources get attracted, not allocated.
8. Power comes from sharing information, not hoarding it.
9. Opinions compound and decisions are peer-reviewed.
10. Users can veto most policy decisions.
11. Intrinsic rewards matter most.
12. Hackers are heroes.

One hesitates to question Hamel, whose edifice of work, bookended by Competing for the Future (1994) and The Future of Management (2007) is as eloquent and substantiated a guide for innovation and future-thinking in management as you will find.

But, what is startling, for those of us around long enough to remember the Web-excited 1990s, which includes Hamel of course, is that these 12 principles are really old stuff, the mantras of the Internet 1.0 … the needs of Gen F are apparently not different to the needs of Gen Y.

But, now it’s a dozen years later, and this future is still the future. Hmm.

New management, but not in old bottles

Actually, surely Hamel’s beef is with the Fortune 500 set particularly, because what has happened is that most small and niche companies have already embraced a big chunk of these new-management attributes. It’s specifically the Fortune 500 that lags: but then, running organizations with stakeholders and budgets resembling mid-sized countries seems to fly in the face of Gen F value set.

Looking abroad, it appears that a Chinese factory or an Indian call center are not about to convert to Gen-F values either. Command and control, and uncreative hyper-attention attention to margins — effected by the Weberian bureaucracy — is the route to profit for them. The old paradigm will rule, and rule well.

From the Future Savvy vantage point, the real future will have, broadly speaking, two types of firm, the Weberian and the Gen-F. Firms running 19th century-type businesses will run them in 19C ways. Funky firms exploiting new ideas have already changed management style significantly and will continue to do so.

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Review: The Age of Heretics, (2nd Edition), Art Kleiner, Jossey-Bass, 2008

One of the conundrums of foresight work is that it demands a macro-perspective, but real change requires focus. In order to get the breadth of view across society and technology to think adequately about the future, the futures analyst is forced to forgo much of the detail, while implementers are thinking: “this 40,000 ft view is very illuminating, but how do I land the plane?” What changes do I make, in my organization, in my industry, on Monday morning, and how do I not get fired for making them?

Kleiner’s updated The Age of Heretics, (2nd edition, Jossey-Bass, 2008) is the modern history of people who find themselves – or put themselves – on the focus side of foresight: who work practically on the ground inside corporate institutions to achieve change, which means by definition challenging the methods and perspectives of their institution. It is not the story of foresight at the lofty level of ideas, but the altogether grittier and more interesting story of how macro-change consciousness meets real institutions, real organizational dynamics, real industry pressures, and real career considerations, in the history of US corporations since 1945.

Kleiner, the editor-in-chief of Booz Allen’s Strategy+Business, is no stranger to the foresight field. He is the ghost-writer behind an eye-popping portion of the futures canon, including The Art of the Long View; The Fifth Discipline, and its Fieldbook; and The Living Company, and so on, (source: http://www.well.com/~art/) so it’s no surprise that the fabric of his text is lush in its familiarity with the players and ideas in the field.

The common thread he follows – through figures like Herman Kahn, Willis Harman, Amory Lovins, Oliver Markley, and so on, is that of the heretic, the maverick against the machine. Intriguingly, along the way, Kleiner gives us a worm’s-eye view of the genesis of many new management ideas, from “lean production” to the “balanced scorecard” to “scenario planning’ – showing how they emerge from and have been engendered by the forces of institutions in productive conflict with their heretics.

The political history of truth, and its future

Philosopher Michel Foucault catapulted our understanding of institutions as a political field, using insights from the history of prisons, hospitals, and asylums to show the relationship between power and knowledge in the evolution of institutional forms. But he never dealt with the modern business corporation. It may be overstating it, but not by much, to say that Kleiner updates Foucault for corporate America. The themes he carries: the role of the deviant, transgression, the evolution of truth, and discursive struggles between insiders and outsiders, are highly resonant. In his previous book, Who Really Matters (Doubleday, 2003) Kleiner developed other parts of this same perspective: showing how every organization’s identity and choices can be understood as driven by the interests of its core group – its powerful insiders.

The Age of Heretics is an engrossing history of change-agents in companies in strategic and organizational transformation. But it’s not just a history. In the future – while the names of the players, and their issues, and the institutions themselves will change, the productive articulation between the heretic and the institution will remain the format of change in big groups. So the lessons of the book are well taken and very highly recommended.

[This review, authored by Adam Gordon, first appeared in The Association of Professional Futurist's Compass Magazine]

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One of the questions I’m asked a lot is whether Future Savvy would have helped to predict the credit crunch. My response, as in this INSEAD interview, has been that the book gives readers the tools to judge the merits of predictions, so wouldn’t have directly helped predict the financial crisis, but it would have been a key resource in drawing attention to the poor view of the future that bankers and regulators were acting on.

In many ways, focusing on whether “this” or “that” is predicted, or not predicted, is to put the cart before the horse. The horse is the adequacy of our approach to anticipating outcomes and the quality of our foresight as a whole. When this is good, the cart – not missing important changes – will follow.

Credit: http://www.lewrockwell.com/blog

In this, it’s important to realize that many did predict the financial crisis (as many predicted 9/11 in various ways). Sticking with the financial crunch for now: it has generally been portrayed it as a “why-didn’t-anyone-see-it-coming” event. It wasn’t. Hats off to The Times for their October 12 piece: “10 People Who Predicted the Financial Meltdown”. Allowing for a fairly loose definition of “predicted,” the article shows that among those who foresaw the crunch were: Vince Cable, deputy leader of the Liberal Democrats (2003); US congressman Ron Paul (2003); Stephen Roach, senior executive at Morgan Stanley (2004); Christopher Wood – chief strategist of a broking firm in the Asia-Pacific Market (2005); and Nouriel Roubini, economics professor at NYU (2006)… and there were many others.

A different problem

So this reframes the problem entirely. It’s not that the predictions were not there. It was that not enough people believed them and, particularly, important decision-makers didn’t believe them or didn’t have the institutional capacity to respond. So there are two halves to the problem: the ability to see the full spectrum of what may happen, including unexpected outcomes; and the ability to act on what we see. Quality in foresight work – the raison d’etre of Future Savvy – makes it possible to see more outcomes more clearly, and to act with more confidence in choosing what to prepare for. (In the real world we can’t prepare for every outcome.)

There was a good letter published in the FT from eminent futurist Peter Schwartz on December 2, which describes this very well. It shows predictions for what they are (one-horse scenarios), and how decision-makers are typically bound into inaction or wrong action not only by working on the basis of a wrong prediction, but by the predictive mindset itself. This mindset – the habit or culture of picking “one right answer” in the face of a complex situation with many competing outcomes, prematurely closes alternatives and leaves us open to surprise. As Schwartz says, as scenario planners have always said (and he was one of the people who defined the field in the first place), a compelling set of alternative future scenarios encourages decision-makers to recognize unlikely and unpopular outcomes, along with expected outcomes, and therefore to be able to respond earlier and more effectively whatever happens.

Scenarios also contribute to the “act” side of the problem. In a well-done set for the banking industry, a financial-meltdown scenario would at least have been in play, institutionalizing the consideration of less unlikely, less popular outcomes in company and government forums, forcing serious consideration of necessary strategies and contingencies, and therein creating the ability to act early and effectively without having predicted the crisis.

The letter is well worth quoting in full:

Sir, The real question regarding the financial crisis is not, as the Queen asked: “Why did nobody see this coming?” In fact, any number of thoughtful people in academia, politics and business had been compiling the data and sounding warnings for several years.
The question we should be asking is: “Why didn’t decision-makers believe that a global financial meltdown was increasingly likely and then act on that belief?” Or, to put it another way: “What would it take to make decision-makers both believe and act?”

The problem is that decision-makers believe that they are forced to pick one right answer: the most likely scenario. Their approach to decision-making does not afford them the opportunity to consider apparently low probability but highly consequential scenarios. The answer, therefore, to the “believe” half of the question is a decision-making process that considers several scenarios: compelling stories about alternative futures that incorporate the analysis of “outliers” and describe three or four plausible paths forward.
Good scenarios force decision-makers to challenge their own assumptions and reconsider what is possible. As a result, they can take seriously those scenarios that seemed less likely at first, but whose plausibility increases over time.

The second part of the question – “What would it take to act?” – is much harder to address. Suppose that Ben Bernanke or Hank Paulson had come to believe a year or two ago that the house of cards was about to collapse and trigger cascading, global failures. What would they have done, given the realities of the complex interconnected systems at the heart of the problem? Perhaps if they had good scenarios with appropriate indicators to start with, they could have rehearsed different strategies and contingencies. Importantly, these decision-makers could have used these scenarios to persuade others on all sides of the issue also to recognise the complexity of the impending crisis in a more timely way. It’s never easy to convince everyone around you that the game they have been playing to their great benefit is about to change. But with a shared recognition of the magnitude of the risks and the ways they might unfold, they could have acted far earlier to prevent some of the dire consequences that have occurred, let alone what is to come.

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A recent forecast-and-critique exchange between economists is worthy of attention from a forecast assessment and evaluation point of view.

The forecast is the recently published academic research paper: Chinn & Frankel (2008), “The Euro May Over the Next 15 Years Surpass the Dollar as Leading International Currency,” Faculty Research Working Paper RWP08-016 (Cambridge, MA: Harvard University, John F. Kennedy School of Government) available here. Frankel is a Professor of Economics at the Kennedy School.

The critique, “Forecasting the Euro’s Future,” by Benjamin Cohen, is here

The argument of the Chinn & Frankel paper, which is also summarized here is that the euro may surpass the dollar as the leading international reserve currency as early as 2025. The authors use econometrically-estimated determinants of the shares of major currencies in the reserve holdings of the world’s central banks. Significant factors include: size of the home country, rate of return, and liquidity in the relevant home financial center (as measured by the turnover in its foreign exchange market). The analysis predicts a narrowing in the gap between the dollar and euro over the period 1999-2007, and forecasts this trend to continue.

Cohen has technical issues with the forecasts, saying, “the analysis addresses just one specific function of the two rival monies – their use in central bank reserves – ignoring all the many other roles that international currencies play. But the essence of his critique is deeper. He says, “By concentrating purely on economic factors, (the forecast) ignores the politics involved, which in practice could prove to be far more decisive… key considerations include both the quality of governance in a currency’s home economy and the nature of relationships between countries. Is the issuer of a currency capable of assuring effective political stability at home? Can it project power abroad? Does it enjoy strong inter-governmental ties – perhaps a traditional patron-client linkage or a formal military alliance? Though it is by no means easy to operationalise many of these factors for purposes of empirical analysis, it is hard to deny their importance (for an accurate forecast.)”

Cohen’s agenda is not merely to tackle possible shortcomings of Chinn & Frankel’s study, but to critique economic forecasters far-and-wide that analyze the technical data, while ignoring political (or social) factors that are hugely influential on outcomes, yet harder or impossible to quantify, and which are therefore conveniently ignored.

Coming to grips with politics
Says Cohen: “Chinn and Frankel are not alone in this shortcoming, of course. Many economists, perhaps even most, have a hard time coming to grips with the intricacies of politics, which can seem so messy and indeterminate when compared with the pristine parsimony of formal economics. When it comes to the analysis of public policy, few even bother to try to address political factors systematically.

“The result, though, is sadly predictable. By ignoring the role of politics, economists often get it wrong. How many trade specialists were prepared for the recent breakdown of the Doha trade talks, despite the obvious gains to be had on all sides from a new round of liberalisation? How many can explain the unprecedented accumulation of reserves in China or other East Asian countries, the widespread distrust of multinational corporations or the failure of the international community to do a better job at combating global warming? Politics is clearly critical to all these questions, and more… (Yet) conveniently, Chinn and Frankel set all these considerations aside in order to build a parsimonious model that they can use for forecasting purposes. Only three independent variables are highlighted in their regressions: country size (relative income), foreign-exchange turnover (representing the depth of competing financial markets), and trend exchange-rate changes (representing the rate of return on currency balances).”

Cohen offers potential political and ideological blockers to the particular forecast: “Japan, for instance, has long relied on a formal security umbrella provided by the United States to protect it against external threats; and the same, less formally, is true for Saudi Arabia and other Gulf states as well. Can we really imagine any of these nations, all very large dollar holders, casually jeopardising their ties to Washington for the sake of a few basis points of return on their reserves?”

To be fair to Frankel, the nature of his analysis is consistently political – see his blog at http://content.ksg.harvard.edu/blog/jeff_frankels_weblog/
One can’t imagine that Frankel or Chinn would dispute that politics will strongly influence the accuracy of their forecast. (What they clearly imply in their data-centered model is that the economic data is backed up by political shifts towards Europe, or at least there is nothing in the political realm that would counter their technical analysis.)

Yet the problem remains that these contextual factors are not built into the model. The technical stuff is quantifiable and gets forecasted quantitatively. The rest is a kind of political/social/ideology soup that we flounder in, and the best we can apparently say is “it’s going in the same direction” or “ceteris paribus”.

International Political Economy
Going with Cohen, one may well ask: what is the value of the forecast that ignores the context, or separates it in this way? Surely very little. As impressive as the economics or the modeling is, the results are are circumscribed by the larger questions that are not in the model, and that affect everything.

As an alternative, Cohen offers International Political Economy (IPE), which explicitly combines political analysis with economic theory, saying, “part of what IPE offers is a critique policy choices as ‘rational calculus by unitary actors responding to well-defined structural constraints and incentives – in effect, an approach akin to the analysis of atomistic firms in a setting of perfect competition.’” IPE suggests three levels of political analysis: the systemic level (macro-international politics); the domestic level, revealing competition of domestic interest groups and institutions; and the cognitive level, ideas that legitimate governmental policy making. If one is not thinking at all three levels of politics, any prediction will surely fail.

Whether IPE succeeds in mitigating the shortcomings of technical analysis or not, one can only say amen to the principle – and that, additionally, there’s surely even more to factor in. Beyond politics, there are issues of technology change, changes in culture, values, ideologies and perceptions that shape the future. Truth is, we don’t know how to quantify all this – and it’s certainly not tractable to quantitative measures for anything but the short term. Using the technical analysis to predict the euro’s status vs. the dollar in 2025 must return a result which (while even possibly correct) is one we cannot rely on.

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Last week I ran a one-day workshop (view program blurb – item C9 – here) “How to Build and Use Scenarios” in the pre-conference courses at the WFS annual meeting in DC. We had 38 attendees and by all accounts much was learned (including by me of course).

This was a fairly typical example of the Intro Workshop in Scenarios program that I run, so I’ve decided to post it on SlideShare, see link below. Let me know what you think.

What is different about this course at this venue, particularly, is that the attendees come from a wide spectrum of industries and sectors (from Nestle strategist to the Canadian military planners, to Mauri sustainability experts, and beyond), and have a very wide background/preparation in futures tools and methods. There were relative experts in the room, and some absolute novices. … nothing like a challenge for the facilitator!

Slides from the day are at http://www.slideshare.net/adgo/how-to-build-and-use-scenarios-day-workshop

some pix:

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In planning seminars and discussions about the future, a key topic is inevitably “technology change.” Participants will turn to each other, or perhaps to industry research or techno-tracking Web sites or “technology roadmaps” to consider technology changes in their industry and in the world at large, and how this may change the future.

So far so good. Tracking technology change is an important stage in scanning the external environment and anticipating sources or change and/or disruption. But no technology ever changed itself. History is littered with fabulous mind-bending, world-changing technologies that didn’t make it out of the lab. In fact, technologies only change because humans or human institutions want them to change AND (two separate hurdles here) they allow them to change.

Most people, most of the time, want technologies to change because they change for the better, improving products and services and/or making them cheaper. Companies want new technologies because improvements offer new sales options and (sometimes) industry competitive advantage, among other things. Societies express the desire for technology to go forward by stimulating and facilitating change in many ways (for example through government or industry funding of R&D or protecting intellectual property or making capital markets more transparent.)

Technology filtered by human choice
Once a technology breakthrough emerges, that’s hardly the end of the story. In fact it is still very much the beginning. New technologies of any importance are subject to public scrutiny and choices. Individually, or as a society, we ask ourselves, is this technology good for us? Debates happen, and power and politics and regulation takes its course, but one way or another technologies that most people like – mobile phone’s for example – will go forward while technologies such as GMOs will stall. Also, in a market economy, technologies are inescapably subject to consumer economics: those that raise user benefit (pass a buyer;s cost-benefit analysis) will be adopted. Those that don’t sit in the lab.

In other words, technology possibility is a matter of science and engineering, and the possibility frontier is expanding all the time, but the road from possibility to actuality is the rocky road of human ideas, preferences, and choices. Technology change means technology adoption, that is, it is a form of social change.

Why is this distinction important? Because one of the main reasons forecast fail is they see the technology possibility frontier as the future, underestimating the forces of social triage. There are two sites that I love that illustrate this wonderfully. Check out Paleo-Future (A Look into the Future that Never Was) and Modern Mechanics (Yesterday’s Tomorrow Today). Both are crammed with failed forecasts of this type. This is not to say that we cannot forecast usefully – much more to come on this in this journal – but it does give us pause in viewing many of today’s techno-inspired forecasts which make the same type of error. (Pics credit to the sites mentioned.)

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