In this environment, planning, learning, and reflection are all too often replaced by sheer reaction. Our leaders in business and government rush from crisis to crisis, putting off strategic agendas in order to deal with every new surprise. Indeed, cascading crises have become the agenda. And this creates significant operational and strategic challenges. Amid such complexity, it’s no wonder that the average tenure of a CEO at a large U.S. company is only six years—and falling.
This month, Business Impact will look at a variety of predictive models and simulation methods that enable business and technology leaders to anticipate surprise and gain an edge. Computer scientists and mathematicians are teaming up with experts in every field to create models of the future that range from tracking how a pandemic might spread to using search data and Twitter feeds to anticipate what consumers will buy.
Some of the models aim to answer big questions in unexpected areas, such as how classroom education could be improved or whether a marriage will survive. Others target multibillion-dollar conundrums facing the world’s biggest industries; experts have devised models that forecast traffic on wireless networks to avoid future meltdowns and anticipate whether space junk will crash into the satellites responsible for global communication. Through it all, it’s important to bring a skeptical eye. Can the future really be predicted at all? And if so, why weren’t we better warned about catastrophes such as the 2008 financial meltdown? Many of us agree that abundant signs of trouble were out there and the tools were working, but we failed to take them seriously enough.
Scenario planning is just one of these tools, although it doesn’t try to predict the future but presents several plausible alternatives to challenge our assumptions and strategies. Others include data mining, business analytics, crowdsourcing, and neural networks. Used correctly, they can help organizations develop the capacity to anticipate crises, recognize and track them as they occur, and prepare contingency plans to deal with them. Ideally, such tools can also enable companies to seize opportunities before competitors even see them coming.
Peter Schwartz is cofounder and chairman of Global Business Network (GBN), a member of Monitor Group, and author of five books, including The Art of the Long View. David Babington, a Monitor consultant, is the 2010 Futures Scholar at GBN.