ETHOS Issue 07, Jan 2010
It is fair to say that Singapore recognises the need for decision-makers to prepare for the future. Our efforts to understand and plan for the future have evolved and improved over the years. Scenario planning is now a key part of the Government's strategic planning process, and has proven useful in surfacing otherwise hidden assumptions and mental models about the world. More importantly, the scenario planning process has helped to inculcate an "anticipatory" mindset in many of our civil servants by getting them to raise "what if" questions on the issues that they deal with. The Risk Assessment and Horizon Scanning programme (or RAHS), launched in 2004 as a complementary capability to scenario planning, is being used to examine complex issues in which cause and effect are not easily discerned; it also serves as a shared platform for analysts from different agencies to collaborate on perspective-sharing, modelling and research.1
Yet why do decision-makers, who have ready access to ample information, fail to respond to warning signals of imminent crises? Why, despite support from the public sector leadership, and years of scenario planning workshops, and with new tools like RAHS, are we still not fully adept in anticipating the future? How can government agencies better organise their strategic thinking about the future?
We miss out on signals not
only because of the limitations
of our tools and methods,
but also because of the nature
of human cognition.
OBSTACLES IN ANTICIPATING STRATEGIC SURPRISES
The human mind can play tricks on us. We see what we want to see, and sometimes miss out the glaringly obvious. So it is with thinking about the future. We miss out on signals not only because of the limitations of our tools and methods, but also because of the nature of human cognition. Many surprises that governments have to deal with—natural disasters, pandemics, even financial crises and political upheavals— can often be assigned probabilities, or anticipated through the "stories" or "narratives" that scenario planners use. This should lead governments to take precautionary measures. The reality is that we often do not.
The reasons why we do not are several. These include confirmation biases, groupthink and other cognitive failures; our inability to make sense of complexity; the problem of retrospective coherence; poor or missing incentives to prepare for strategic surprises; and fragmentation of risk.
WHAT THE SINGAPORE PUBLIC SERVICE CAN DO
Over the years, I have become increasingly convinced that thinking about the future and strategic surprises will remain a messy business. If we try to get precise predictions, we are pursuing the wrong aim. We cannot predict the future. As futurist Peter Schwartz noted, "the objective is not to get a more accurate picture of the world around us".2 Rather, we should seek to provide input for decision makers to make informed assessments. His colleague from Royal Dutch/Shell, Pierre Wack, added that scenarios should "help change assumptions about how the world works" and "compel people to reorganise their mental models of reality".3 Good scenarios should facilitate better decisions, not better predictions.
WHY WE FAIL TO ANTICIPATE THE FUTURE
Decision makers tend to discount future risks and contingencies, and place too much weight on present costs and benefits. Governments are also prone to confirmation bias, which is the tendency to pay attention only to data which is consistent with existing mental models. For example, during the boom years before the current financial crisis, most experts dismissed the risks of a major financial or economic crisis. The few who foresaw an impending crisis—like Nouriel Roubini and Nassim Taleb—were roundly ignored.
Social networks and groupthink are also a source of confirmation bias. Mavericks—whose views do not conform to group opinions— tend to be rejected; they will disappear over time unless a mechanism is set up to protect them. Crises can also break outdated mental models, but they are an expensive way to force recognition of confirmation biases.
What can be done: Well-crafted, challenging scenarios that articulate imaginative yet plausible ways in which the future could evolve, can prompt management to think the unthinkable and consider radical approaches and circumstances.
INABILITY TO MAKE SENSE OF COMPLEXITY
There is a tendency to focus on what can be modelled or extrapolated from today's trends; what is not modelled is discounted or assumed away. As a result, scenario planners often concentrate on "known unknowns" rather than on "unknown unknowns". But future states of the world can emerge from parallel developments whose interactions are unforeseeable, unforeseen, or unseen, and cannot be predicted from a linear extrapolation of past developments.
Rational, quantitative thinking is easier to deal with than complex, open-ended reasoning. However, the metrics used can fail to reflect reality, and worse, inhibit thinking about underlying complexities in the operating environment.
What can be done: Scenario planning should not be reduced to a simplistic engineering exercise in which driving forces are the inputs, and scenarios, the outputs. Instead, these raw ingredients can interact in bewildering ways to produce unpredictable outcomes and patterns in the eco-system. So in addition to driving forces, look out for potential discontinuities, emerging issues, black swans, wild cards and other strategic surprises.
THE PROBLEM OF RETROSPECTIVE COHERENCE
The current state of affairs always makes sense, but only in hindsight. The current pattern, while logical, is only one of many patterns that could have formed, any one of which would have been equally logical. While the present situation is the result of many decisions taken along the way, retrospective coherence says that even if we were to start again and take the same decisions, there is no certainty we would end up in the same situation.
What can be done: Be aware that the lessons of history are not enough to guide us down the right path into the future. Furthermore, approaches and policies that have worked well in the past may actually prove dysfunctional when applied to the future.
POOR OR MISSING INCENTIVES
Even if individuals and organisations are mentally prepared for a future contingency, they often do not have the incentives to hedge against it. Hedging is costly, and risks—as the global financial crisis shows—spill across boundaries in ways that make it impossible for a single country to hedge against fully. In the financial crisis, some participants were even incentivised, on a local basis, towards risky behaviour that contributed to the crash. So it was much easier for observers who were not beneficiaries of bank bonuses, such as economist Nouriel Roubini, to contemplate and anticipate a crisis.
The strategic planner often has a hard time challenging the official future, especially when that future is consistent with an organisation's biases and preconceptions. The planner who brings up radical alternatives risks being branded as lacking a sense of reality; he has a real incentive to make scenarios more palatable. But in so doing, he also reduces the impetus for the organisation to confront its uncomfortable futures and prepare for them.
What can be done: Futurist Peter Schwartz once said that the scenario planner should aim to be a court jester—he must be able to say the most ridiculous things and get away with it. The scenario planner is supposed to help us suspend our disbelief.
FRAGMENTATION OF RISK
Hierarchies tend to optimise at the agency level, sometimes at the expense of global optimisation, because information flows most efficiently within vertical silos, rather than horizontally across organisational boundaries. Ministries will tend to have tunnel vision in the way they look at risk. But one arm of government doing something that perfectly matches its "local" performance goals can create a big downside for the rest of the larger system.
What can be done: Take a whole-of-government view and ensure that incentives do not result in perverse behaviour. Avoid the fragmentation of risk by breaking down vertical organisational silos, promoting the horizontal flow of information, and encouraging whole-of-government strategic conversations.
∼ Peter Ho
The challenge for us is how we can find a better approach to anticipating strategic surprises. Let me outline five key ideas for our Public Service.
First, we need to acknowledge that we will always face limitations in anticipating strategic surprises. Even in the most forward-looking government, leaders and officials will have their own mental models and cognitive biases, and seek confirmation for them. Being aware that we have biases is already a step forward. When we started scenario planning nearly two decades ago, we were not as sensitised to cognitive biases as we are today. Knowing what we know today, we can take a number of deliberate steps to compensate for our consistency biases.
We should take steps to inject much more real diversity into our strategic conversations. In the United States, the Defense Science Board is commissioned by the Department of Defense to consider strategic issues. Besides bringing experts, academics and professionals to the table, the Board sometimes includes in its discussions people with no defence background at all—artists, actors, musicians. But there is method in this seeming madness. By gathering a diverse group of people, the Board hopes to garner insights that would not be achievable from a team comprising only professionals and experts with similar backgrounds.
In Singapore, we probably have more think-tanks per capita than anywhere else in the world. They ought to be tapped more systematically, because they can be a rich source of fresh insights that can better inform policymaking and planning. Conversing with think-tanks, like engaging in public consultation, should be seen as part of the effort to operate in a complex, inter-connected and non-linear world, in which insight and good ideas are not the monopoly of government.
Networked government does not just mean networking among government agencies. It means networking with individuals and organisations outside government as well, locally and internationally. It is through such ways that we can avoid the trap of groupthink. We should actively organise our strategic conversations to keep an open mind, by encouraging a range of perspectives that do not conform to our own mental models, and by challenging our thinking with contrarian and diverse views. This does not mean we must agree with every view. But we should give each a hearing so as to honestly and objectively test our own ideas.
Second, we should recognise that the cost of responding to some strategic surprises can be just too high politically, especially if governments will be perceived to be allocating an inordinate amount of resources to prepare for eventualities that may never happen. For instance, there is a possibility of the earth being destroyed by a planet-killing asteroid, but this is probably not a risk that we (in Singapore) can meaningfully prepare for, given the prohibitive costs today. We cannot eliminate every risk, but we need to manage them in such a way that strategies and their premiums are not front-loaded.
Third, we have to calibrate strategic thinking processes around the psychological and practical challenges of policy implementation. In addressing these "downstream" issues, methods matter, but psychology matters as well. We will have to harness the relative strengths of the scenario planning and RAHS to mitigate issues of cognitive dissonance and consistency biases.
Insight and good ideas are not
the monopoly of government.
Fourth, it is important to engage and communicate with decision-makers. Their support and active involvement are crucial in achieving better decisions and strategic outcomes. For a message to resonate strongly with decision-makers, the work should be presented in distilled forms, with sufficient detail, using creative expressions and relevant, compelling graphics or visual aids. In addition, complex scenarios and strategies can be broken down into smaller "bite-sized" pieces. These are more easily digested by decision-makers who, in turn, are more likely to recall and apply these insights.
Fifth, we have to recognise that even as we endeavour to avoid being surprised, we should still expect to be surprised. To mitigate this, governments should build some resilience into the system. Among other things, resilience is the ability to address issues with multiple possible trajectories. It is also the ability to adjust to rapid and turbulent change. It is going about our daily business while operating in an environment of near-continuous flux.
Resilience will be an increasingly important driver of competitive advantage in the future. In a world of growing volatility and uncertainty, our approach to policymaking needs to go beyond an emphasis on efficiency, towards building resilience. Indeed, lean systems that are purely focused on only efficiency are unlikely to have sufficient resources to deal with shocks. Of course, this is not an argument for establishing bloated and sluggish bureaucracies. If there is to be "fat", it must be directed to specific purposes.
In this regard, one important idea is to have a small but dedicated group of people to think about the future. The skill-sets needed for long-term policy planning are different from those needed to deal with more immediate volatility and crisis. Both are important. But those charged with thinking about the future should be given the freedom and allocated the bandwidth to focus on this important role without getting bogged down in day-to-day routines. These people will become repositories of patterns that can be used to facilitate decision-making, and especially to prepare for "unknown unknowns". What we need from this small group of people is the capacity to conduct strategic thinking about future possibilities to facilitate more considered decision-making, perhaps even to conduct policy experiments on possible alternative futures, or policymaking by discovery.
In a world of growing
volatility and uncertainty,
our approach to policymaking
needs to go beyond an emphasis
on efficiency, towards
A CENTRE FOR STRATEGIC FUTURES
In order to put these principles into operation and strengthen our capacity to think about the future, we have set up a "Centre for Strategic Futures" (CSF) in PSD. Over time, together with the Strategic Policy Office and supported by RAHS, the CSF will become the focal point of futures-related work in the Singapore Government. It will work towards promoting whole-of-government thinking on the key strategic issues of the day. It will support the development of capabilities within the Singapore Government in futures methodologies through its core functions.
The Civil Service College will play an important and complementary role to the CSF, by helping civil servants develop the competencies, instincts and habits of mind to tackle uncertainties and manage complexity. This will be done through seminars, programmes and courses on complexity as well as futures thinking and tools, and the documentation of case studies on how the civil service has applied futures work.
While the CSF will play a role in the cultivation of the Government's preparedness for the future, every ministry will also need to build up its individual capability. To facilitate this, we have just established a "Strategic Futures Network", to be made up of Deputy Secretaries from each Ministry. We expect that the Network will play a catalytic role in promoting futures work within the civil service, by expanding the reach of the CSF into the ministries and agencies. The Network will have a key role in establishing a common vocabulary for strategic planning, and nurturing the instincts and habits of strategic whole-of-government thinking about the future.
ROLES OF THE CENTRE FOR STRATEGIC FUTURES
CHALLENGE CONFORMIST THINKING
- build networks with diverse perspectives within and outside Singapore
- engage local think-tanks and universities, international counterparts and global thought leaders
- conferences on futures-related issues
CALIBRATE STRATEGIC THINKING PROCESSES
- focus on practical policy development and implementation
- Scenario Planning Plus: integrated framework together with RAHS, WOG Risk Management
- coordinated platform for inter-agency discussion
- develop new capabilities and a core group of facilitators
IDENTIFY EMERGENT RISKS
- communicate emerging issues, wildcards and strategies to decision makers
- in parallel with an integrated WOG Risk Map and Risk Register
CULTIVATE CAPACITIES, INSTINCTS AND HABITS
- mindsets and HR capability for dealing with uncertainty and disruptive shocks
- promote strategic conversations among public servants
- nurture WOG-level strategic thinking and sharing across agency lines on "what if" questions
Overall, the CSF will seek to build on the work of scenario planning in facilitating a common, whole-of-government vocabulary for strategic planning. This is important not just to analyse the future, but also to understand the present.
To deal with consistency bias and cognitive dissonance is to nurture in our people the instincts and skills to be sensitive to discontinuities. In an increasingly uncertain and complex environment, it is imperative that we have the courage to open our minds and take bold but pragmatic steps forward. The CSF is an important step in building capability in futures work, and to develop and strengthen inter-agency collaboration for networked government. The CSF will play a key part in keeping us at the leading edge of governance, enhancing our decision-making capability and the service that we provide to Singaporeans.
- RAHS incorporates into a
computer-based platform a suite of methods and software designed to help
analysts detect and investigate emerging strategic threats and
opportunities. For more information, see https://www.dsta.gov.sg/latest-news/news-releases/news-releases-2007/risk-assessment-and-horizon-scanning-rahs-system-rahs-experimentation-centre
- Dearlove, D., "The Thought Leadership Series Peter Schwartz Thinking the Unthinkable: an interview with Peter Schwartz, scenario planning futurist," The Business, September 2002:22-23.
- Wack, P., "Scenarios: Uncharted Waters Ahead," Harvard Business Review, 63 (1985):72-79.