Innovating for an Uncertain Future
Prediction is the art of synthesizing past data in order to make decisions for the future. Given the complexity and dynamism of the global security environment, often even well-researched and rigorous predictions are akin to driving while looking in the rearview mirror. Good prediction therefore requires analyzing the structural drivers which underlie trends in order to understand where the future is likely to depart from the past. Innovating for the future consequently requires deconstructing risk and embracing uncertainty.
As a term, uncertainty is often used synonymously with increased risk. More precisely, uncertainty is simply the unpredictability of future events or a wide range of potential outcomes which make accurate risk prediction difficult. But an uncertain environment, even one filled with high-impact, low-probability events can present opportunity. An uncertain future becomes such an opportunity space if we are agile enough to respond. In order to build that internal agility, past data can serve as the foundation for preparing the future, but is insufficient on its own. Innovating for the future requires recognizing human and organizational biases, the central value of quantifying risk and uncertainty for use in decision-making, and continually challenging our own assumptions.
The neurochemical traits that gave early humans survival advantages also make us poor judges of risk and uncertainty. Humans are biologically conditioned to overestimate the potential impact of events that occurred recently, of things told to us by trusted sources, or which have the potential to impact us personally. We consistently underestimate uncertainty and overstate the potential impact of things which we feel we have the ability to influence or control. These biological traits explain why crowdsourced answers are often more accurate than the opinions of single experts. Diversity of thought is a key component of innovative organizations and we must make conscious efforts to avoid group-think and cultivate alternative perspectives.
Organizations with a history of success are often loath to stray far from approaches which yielded success in the past. They become delusional about their own market position or organizational strengths and fail to take advantage of opportunities on the horizon. Companies that once dominated a market sector, Kodak and Blockbuster, for example, ended up bankrupt.
Developing confidence in the uncertainty space requires understanding that the distribution or range of potential possible answers is often more important than the answers themselves. Coming to grips with this is not a difficult or resource intensive task; all it requires is the space and permission to think differently and organizational honesty to respond. If done correctly, such assessment will always list things for which the organization is woefully underprepared. In the same way a world-class marathoner cannot be a world-class sprinter, the decisions made intentionally or unintentionally optimize the organization in defined ways, and an organization cannot be world-class unless it is so optimized.
Practically speaking, this means as we prepare for the future we must consider scenarios and wildcard events that play to our current weaknesses, as well as to our strengths. Recent history has shown us that potential adversaries rarely challenge our strengths head on. But once the uncertainty space itself is understood, risk can be quantified. Assigning rough probabilities to the structures underlying both positive and negative scenarios can help to create an initial framework for understanding risk. Then, in order to reduce complexity, first treat the component pieces as independent parts, and only then add correlation assumptions. Such an exercise will create a map of the future risk and opportunity space, which gives the organization a common currency with which to trade and discuss risk, even in the face of uncertainty and complexity.
Ultimately, strategy is about what you choose not to do and innovating for an uncertain future requires an honest discussion and the ability to make conscious decisions about where to be weak, where to be strong, and how to be adaptable and resilient. Employing methods, such as the ones discussed here, can build resilience in the face of asymmetric and unpredictable threats to Department of the Navy and to the United States.
** = The opinions expressed here are solely those of the author, and do not necessarily reflect those of the Department of the Navy, Department of Defense or the United States government.