decisionmaking

Critical decisions–four-quadrant scenario analysis

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The widely-used four-quadrant scenario method is usually based on weighing the potential outcomes of a pair of uncertainties. Using a four-quadrant diagram with the two uncertainty dimensions gives us four distinct "what if" scenarios. It’s a great tool for analyzing possibilities, and also sometimes for presenting a range of potential scenarios in a logical, clear way.

But the model can also be readily used to test out potential decisions. This works when the future focus is more tightly on a system that we can control directly, especially, an organization’s decisionmaking. In other words, if for one or both of the “uncertainty” dimensions the uncertainty is what we will decide to do, the what-ifs of the diagram become “What if we do this?” versus “What if we do that?”

In the example below, a youth baseball organization faces a decision about whether to expand its more competitive “travel” program, or to maintain its status as a recreational league. The uncertainty dimension is, in this example, in-region competition, i.e. the marketplace. But the key is using the tool to explore a decision the League needs to make.

A leadership group won’t necessarily agree on the impacts of the decision, but arraying the possibilities in this way helps bring their focus on the what-ifs of taking a particular action. At a minimum, it will clarify where they do and do not agree, what their assumptions are. Also, the tool will help them play out potential risk in their actions, even if they are unsure of the outcomes—they can map out scenarios of risk in their decision. 

Critical Decision

 

See some great insights here too: http://www.ribbonfarm.com/2009/04/20/how-to-draw-and-judge-quadrant-diagrams/

Make better decisions now with better foresight

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Let’s presume you have this goal: Make better decisions now as you build strategies for the next 3 to 20 years.

To do that, you need to understand your operating environment. You need to know what is likely, and what is uncertain, and find strategies that are robust for a range of potential futures.
 
Most people have long since internalized the idea that we need to be proactive, not reactive as things change around us. A strategic organization does not simply respond to new situations and pressures as they unfold. It anticipates change, and identifies, sorts among, and emphasizes the new opportunities that change offers. Reaction only tends to reduce the opportunities you can take advantage of.
 
If you want to get this right, foresight needs to be the linchpin of your efforts. Foresight is at once a broadening and deepening process. Its goal is to expand thinking more deeply into the future. But by its nature, it also opens up thinking to a broader range of forces and trends unfolding now. That’s why good foresight can inform today’s actions, as well as your strategies for moving forward. It sharpens your awareness of what’s happening and how it’s meaningful today.
 
How can you get foresight going in your organization? Here is how you can get started:
 
Plan a workshop. A group effort is strongest when that group can get together in real time, and, ideally, in one place, to explore the future and develop new strategic options. An independent facilitator, and, perhaps even better, a futurist to facilitate this workshop could help keep people truly focused on the future. Naturally, I’d be happy to help! 
 
Who comes? Ideally, you should include people representing 1). A range of functions in the organization, and/or a range of stakeholders, 2). People with the right knowledge and access to information and resources to get good strategic thinking done, and take part in implementing new strategies and actions, and 3). The people charged with driving change and strategy, so that they will understand the new thinking you generate, and be ready to implement good new strategies.
 
What goes on? There are plenty of tools, techniques, and facilitation approaches you can reach for for a foresight workshop. But the goal is not to wow people with technique, the goal is to have a serious, in-depth conversation about your future. You need to give the future its due, and clear the air and the agenda for that discussion. Keep it simple and focused, and you’ll get results. That, by itself, is good foresight.
 
You need to expand your horizon, and look at the fullest (nearly always global) context for what your organization does. That means looking not just more deeply into the future, but also more broadly, and sectors, regions, technologies, social spheres, etc. that you don’t normally pay much attention to. Again, it will help to have a fresh view of the external environment, to carry your thinking far enough out into the world and into the future.
 
You should consider having a briefing from someone skilled at shaping an external view for you, and helping you discover how the broad forces and trends at play could shape your interests. A futures briefing is valuable in getting that done. Again, happy to help!
 
Then, have your group share, and collect for everyone to see, the big forces, trends, and issues shaping your future. Don’t worry about which is a force, a trend, or an issue, just collect the big things that matter. Don’t let the list narrow to the usual forces and trends you always talk about. Too often, the groups I work with want to make budgets the central focus. Taking a longer-term view, and a fresh look at opportunities and even new business models, means today’s budget won’t be the whole story. New initiatives, for example, can have new money.
 
You are looking around corners here, looking for things that may not obviously matter now, but could be essential to shaping your future. This discussion shouldn’t get fixated on constraints such as budgets and other lack of resources, or even current regulations. You should carry your thinking, your “what if” discussions, past those obstacles.
 
Prioritize your list of the big forces, trends, and issues, combining similar things, and then have your group vote for the ones will have the biggest impact. Keep encouraging your group not to just vote up the usual suspects: e.g. the price of oil, regulation.
 
Then, spend plenty of time talking about each of the top items, ideally in groups of four to eight people. Your goal is to draw out the implications of the force, issue, or trend for your business. That is how you can bring the focus back in, on strategic possibilities for your business. I have found over the years that in this part of the process, you need to get people to focus on the challenges, but also the opportunities, and the near-term, but also the longer term.
 
Finally, have a whole-group discussion of what you learned through this process. Get the groups to brief everyone on what they discussed and what they concluded from the discussion. It may make sense to have them conclude with implications for action. Capture these ideas for everyone to see, and for later reference. If you can, have some of the chiefs in the room to hear what the group concluded.
 
The group can spend some time decided what to do next, whether that is a list of concrete actions to take, or just a list of ideas you need to research or develop further. More often than not, you will discover through this process that there are things you don’t know and people in and out of the organization you need to talk to, and involve in the discussion. Make a plan to do those things.
 
Identify champions, or, at least, who will take the next steps.
 
What you get. Through this process, your team will come up with insights on what’s happening, and what it means to your organization. You may get to next steps, and you should try to. Otherwise, the effort stays abstract, and may be taken as just an “exercise”.
 
What I’ve just described is a path to organizational foresight. Do this once, and you’ve made a difference in your work. Do it regularly, and you will have built what I like to call a foresight culture. Good luck with this, and, let me know if you could use my help.
 
Image: Victor Chapa, via Flickr, Creative Commons license

Thoughts on Why?

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Why? by Charles TillyJust because your careful, reasoned look at the future makes a decision or conclusion clear to you, doesn’t mean everyone else will “get” your reasoning. When you have grasped how things are changing, and decided what should be done that is new and different, you still have to explain your thinking to others.

It’s hard to make change without doing that, and there are some good ways of understanding what kinds of explanations might work. Charles Tilly’s Why? (2006) explains how we explain things, and is a good framing for people trying to get others to understand the basis for conclusions and decisions about the future.
Tilly describes four ways we answer the question Why? Let me use a story from my family to show what each one is about.
A couple of years ago, we decided to dismantle a wooden swing set in our backyard to make room for an addition to the house. At the time, one of our boys was about 7 years old, and he was the key stakeholder in this decision. He was the one who would ask Why?
As I used a crowbar to dismantle the swing set, while my son was out for the day, I tried out Tilly’s four kinds of explanations in my mind. Here they are with my thinking ab out what I would tell my son:
  • Conventions–Connect the decision to common practice, what others are doing, the social, business, societal norms. In my case I framed it as: “You’re a big boy now, big boys don’t play on swing sets”
  • Stories—Use a story to explain the situation, put the decision in a context familiar to the ones you are explaining it to. My approach: “Remember how we’ve been talking about building a climbing wall up to the tree house?”
  • Codes—Frame the decision as essential to legal requirements, social norms, rules, etc. My framing: “If this were a public park, the swing set would not meet safety requirements, and we’d be told to take it down”
  • Technical accounts—Explain the decision technically, with the technical details making the case for a change. My technical explanation: “The pressure treated wood has gotten splintered and rotted, and isn’t safe anymore”
 
In my work with Jennifer Jarratt, we’ve increasingly recognized the value and power of stories. This certainly carries over to explaining the reasoning behind changes that are often scary for people. But stories are not the only thing to reach for. Of the four kinds of explanations, your situation may dictate what you use and perhaps what combination you use. On my decision, I used the story approach, using it to show my son the promise of something better.
It’s critical to remember your audiences when you explore how best to explain things. What we’ve found over 20+ years helping people explore the future is that we often start our efforts with a technical group, one that’s happy and comfortable in having technical explanations for things. The problem arises when they see their stakeholders and ultimately the public as most easily swayed by a technical explanation. For a young boy, at least, the technical explanation would have failed, led to tears, in fact.
Of the four, I am tempted to say that conventions is the weakest, but we have to remember that lots of people, even lots of business executives, have times when they want to follow the norms, and not take big risks or strike out on their own. Conventions may be quite compelling to them. For a 7-year-old, saying “you are a big boy now” rings hollow. He felt like a little boy, and couldn’t imagine life without his swing set.
Codes are important too, because they tend to be fixed requirements. You are not usually in position to change them. But they are not sufficient explanations to really energize people to get them on board for doing something new. Our son didn’t, of course, care about codes, about the law, and so on. He just wanted to have a place to play.
In the end we built a great climbing wall up to the tree house. The decision made sense to the critical stakeholder. The future didn’t look scary or arbitrary.

A rock becomes a bear, and a bear becomes a rock

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Black bear, AlaskaLinda Lieberman is a U.S. National Park Service ranger with years of experience interpreting nature for National Park visitors. This Summer, we met her in Glacier Bay National Park, Alaska, and she led us on a glacier cruise where we saw lots of wildlife, including a grizzly bear and her cubs, foraging on the rocky beaches for mussels and other delicacies.

Linda told us that she’s learned from park visitors over the years that the rock you are staring at can become a bear, and perhaps just as often, the bear you’ve spotted becomes a rock.

Humans are superbly evolved for pattern recognition, but we mix into that skill a tendency to see what we expect to see, and sometimes what we want to see. When my family and I are park tourists, we want to see bears—we have years of experience with rocks becoming bears and bears becoming rocks.
Jerome Groopman is a physician and writer who has made a study of how doctors make diagnoses and decisions, exploring his own clinical experience and the luterature of heuristics. Heuristics is a complicated word for how we figure things out, including the patterns and "rules of thumb" we use.
In his book How Doctors Think (2007) Groopman examined our pattern mis-recognition tendencies in the context of doctors making diagnoses. In their frenetic world, they have to make quick diagnoses, and they often get it wrong.
Here are the main ways Groopman says doctors get it wrong. I’ve paralleled what Groopman observes with the parallel errors we can make in exploring the future:

Representativeness—Letting what is most typically true influence what you see and don’t see, e.g. the symptoms commonly associated with a problem will always be there

In futures:

  • Assuming a different culture, group, organization, or person will do what we would in the same circumstances
  • Missing discontinuities-clues to potential sudden shifts and breaks in patterns hidden from us by what seem like the much clearer evidence of familiar patterns
  • Assuming a change you’ve observed is representative of what’s going on, because it’s part of your life or experience, e.g. “everybody is composting household food waste” 

Availability—Being influenced by the patients recently seen, e.g. the last five cases had the flu, so this one must also

In futures:

  • Assuming that history repeats itself
  • Using a narrow worldview to interpret the unknown—“people won’t like that”
  • “We tried that already”—something I think is similar to this idea didn’t work before, so it won’t work this time
  • Straight line trend extrapolation—the trend will continue because of the past record, with do sharp breaks, changes of directions, and so on

Affective error—Making decisions based on what the doctor wishes is true, affected often by an emotional sense, e.g. the patient reminds me of me, the patient is a young healthy guy, and can’t be all that si 

In futures:

  • The thing I know and care about (change in my lifestyle, e.g.) is typical and represents the bigger picture future
  • Wishful thinking, everything will work out ok
  • Our product/technology is the future—because we love it, it must be the best fit for the situation and the best choice for the future
Jerome Groopman's How Doctors Think
Doctors, at least in the U.S. clinical settings, and more legitimately on the field of battle and emergency rooms anywhere, have to make decisions very, very quickly. People engaged in foresight have, and ought to take, the luxury of time to really think about things, catch themselves in these thinking errors, and, if possible, get closer to the truth. I wrote about our speed of decisionmaking in a closely parallel post, Don’t blink.
In exploring the future, we’re prone to each of these sources of error. Perhaps no one’s life is immediately at stake, but the cost of error can still be high, especially in missed opportunities, and in mis-timing an action that counts on a change in the marketplace.
We need to keep reminding ourselves of our human capacity for misinterpreting what we’re seeing, assuming continuity, finding what we’re looking for, and, especially, for wishful thinking.

Don’t blink: Thinking differently means having second thoughts

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Don’t blink! Malcolm Gladwell’s insightful book Blink on what he calls “rapid cognition” is not wrong, just easily misinterpreted. It would seem to tell people to go with their first “gut” response to something.

But your first response to new information, an issue, or an idea may be too limited, too narrow, and incomplete. The problem is, in your busy life, especially your work life, you may not have time for reflection, or may have lost the habit of letting things steep in your mind. Gladwell doesn’t argue that the “Blink” response is always right, or always useful, only that it’s occasionally, and in specific situations, very powerful. I believe in exploring the future, we need to have second thoughts.

The blink response gives awfully little chance for further intuition to emerge. In our quick-paced world and under pressure for action, most of us are likely to have an inside-the-box response to a problem, and to offer a conventional response or a narrowly-pitched one. Unless you have the mental ability and habit to always think about things differently, you can come up short on breakthrough ideas.

An example. A member of a school committee I serve on posed a question about the school’s annual Field Day. What should the school and parent volunteers do about drinking water for the children, since we have realized the waste problem with plastic water bottles? She wanted to explore having big water coolers and cups for the children to use, instead of buying bottled water. Then the problem was the waste cups. Should we use compostable cups? Recycled-content cups?

No doubt because of my decade of work on the future of packaging, my first response to this question was a technical one. Biodegradable cups are on the market, and we could use them, but we don’t have a composting outlet for collected used cups, and our city incinerates its trash. Therefore, we would need a composting system set up. But this is impractical for now at our school’s scale of need and ability to manage. So we had either no solution, or would best just use plastic bottles and be sure all of them got collected for recycling.

Those were first thoughts. They are normally inside-the-box thoughts, which often have a technical flavor. This is just about tweaking the system as it exists. And it also reflects our routine tendency to respond to the question put before us, as it has been framed for us, and not look under the surface for other ways to think about the situation.

When I let my second thoughts emerge, having given the problem time to sit in my mind, it was possible to move from thinking “what containers should we use: cups or bottles?” and “what kind of cups?,” to “what about no containers at all?”. The solution I proposed is that we get or make portable water fountains that connect to fresh water faucets via garden hoses. There will be no waste. By replacing the Field Day question: “What will the children drink their water from?” with the question: “How will the children get water?” it’s possible to move to a better response. Second thoughts need their chance to emerge.

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