Volcano Lessons: Preparing for Future Events

The Issue
If you've heard me speak at a conference or another event recently, you likely heard me say that in many important areas no one can predict the future.
So if you don't know what will happen, how can you prepare for it? The solution to this dilemma is that you don't have to predict future events in order to prepare for them.
We have a recent example with the Eyjafjallajokull volcano. Could anyone have foreseen the effect a single volcano could have on air travel around the world? Careful now, because that is a trick question: I am asking if anyone could have foreseen the effect, not the volcano.
The Thinking
People generally are not very good at looking to the future. There are many solid scientific studies detailing some of the failings in human thinking. Some examples: the first information we see "anchors" our expectation; we jump to conclusions; what we see is filtered by our experiences.
These characteristics of the hardware of our thinking result in several common behaviours from many people when it comes to preparing for future events. In order of increasing awareness, they are:
1. They don't look to the future at all, or
2. They look to the future, but decide future events can't be predicted so there is no point spending time on them, or
3a. They look to the future, consider some possible future events, but decide they are extremely unlikely and there is no point spending time on them, or
3b. They look to the future, consider some possible future events, and decide they can predict the future, so there is no point spending time on any other possible future events.
The problem with these approaches, even 3a and 3b, is that they are event driven. And probably the biggest failing of human thinking is that if something hasn't happened to us personally, we find it extremely difficult to conceive it will ever happen. So if you have personally never had a computer fail, or a hard drive crash, it will be tough to convince you that backing up your data is a necessary task. (Having worked with computers since the early days when they were much less reliable than they are now, I have had many such experiences, and thus am probably better than most at backing up my data.)
Instead Look at Consequences
Even the burgeoning field of risk management is often about identifying and quantifying risks, rather than looking at the consequences of the risks and most importantly how to minimize the consequences.
But if instead you look at what the effects would be if you lost some critical systems, you can prepare for future events without necessarily predicting why they might happen.
What would you do if some or all of your business or your work was disrupted? Start by asking simply "what would I need to do?" (You can look at how it might be disrupted, and how likely later on.)
Some specific examples:
Systems: telephone, Internet, loss of a computer, Blackberry, web site, e-commerce site, or electrical power (our power here in downtown Toronto is so reliable, I almost forgot that one!)
People: key personnel - what if someone was hit by the proverbial bus? And remember, almost everyone in an organization has unique knowledge. If you're working to a tight deadline on a project or a proposal, and the one person who knows where to go for the special binding is away, you may miss your deadline.
Suppliers: How vulnerable are you to a supply disruption, either short term or long term? What if a supplier shuts down for some reason? When I have designed electronic equipment, almost invariably there would be several times during the design when a decision had to be made: should we use a unique part which would enhance performance but is available from only one source, or compromise performance but have a design that wasn't dependent on a single supplier?
Customers: what if your largest, or several of your largest, customers went away (for whatever reason)?
In 2008 many financial professionals claimed "no one saw the recession coming" (though I maintain there were many warning signs.) Many investment advisors and investors were caught when they didn't examine what would happen to their investments if the stock market went down. As a result, they lost a lot of money, and some have had to delay retirement. Even without the warning signs, it was possible to prepare for the consequences of a stock market crash. I rebalanced investments in the summer of 2008 not because I predicted the stock market crash, but because I thought about the possible consequences and decided I didn't want to be worrying about which direction the market might take.
Some Examples
The Globe and Mail newspaper had an article discussing how various people who were stranded by the volcano handled the situation. For me, the most instructive example was the News Director from Corus Entertainment in Vancouver who was stranded in London. Corus had developed a process for employees to work remotely in response to the fears of a flu pandemic and disruptions from the winter Olympics. The fact that the system was already in place allowed him to be instantly productive. I'm sure no one at Corus was thinking of a volcano when they planned their remote work capability!
On a personal note, I always carry two laptop computers when going to do a presentation. It makes for a heavy bag when travelling through airports or up and down stairs. Yet after doing this for years, one time the graphic card in one of my computers failed. Without the backup computer, I couldn't have presented my slides.
What Steps Should You Take?
Identifying vulnerabilities is best done as a bottom up approach. Each employee knows their job best; asking them what is essential to the performance of their job is a good starting point. There is a worksheet at the end of this article to assist you with the process.
Sometimes having someone "interview" an employee can help them identify the equipment and tools they take for granted. This can be another employee in the organization, but be careful: unless they are from a different department they may be making the same assumptions as the interviewee.
In consolidating this information, I am a big believer in visual sharing of information. Bringing people together to jointly share their knowledge and experiences is most effective when everyone is looking at the same view.
We use tools such as Mind Mapping, Concept Mapping, and other types of diagrams to record this information. Decision making tools such as the Paired Sort tool can be used to prioritize items.
If you start at the individual level, and work up through departments to the organizational level you can consolidate the information and identify priorities. But remember not to ignore something simply because it doesn't seem likely (remember the volcano!)
Allocating a small but definite amount of time each week to creating and them maintaining these systems avoids the possibility that the effort fades as quickly as everyone's memory of the volcano.
Once the information is in place, taking it to the next level can involve Scenario Planning and System Dynamics to examine and model possible future events.
Conclusions
Back to the first question - while it is unreasonable to expect anyone to have predicted that a particular volcano would erupt in a way that would shut down European air space, it is entirely within reason to anticipate some event that might shut down air travel. (We even have a precedent with the days after 9/11.)
It is not possible to predict future events in many important areas. It is not possible to plan for every single eventuality. But you don't have to predict what will happen to be prepared, just think through the consequences of it happening.
As air travel in Europe returns to normal, I hope organizations will take away the right lesson. The obvious lesson is "no one could have predicted a volcano." The better lesson is "we must examine our vulnerabilities to unforeseen events."

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Avoiding Bad Decision Making

Avoiding Bad Decision Making

By Randy Park, Foresight Facilitator

As 2010 is unfolding, whether you are optimistic or pessimistic about this year, here are
some questions to consider:

What does bad decision making look like in your organization?
Here is a practical definition: a bad decision is a decision made by an individual or agroup in your organization that could have been avoided, and that results in a lower total value (present and/or future) of your organization. Each organization will end up with a slightly different definition, based on what they value (i.e. money, reputation, morale) and how far into the future they plan. But the key principle is that bad decisions could have been avoided, through better decision making.

How much does a bad decision cost your organization?
Of course, that will depend on the situation. For example, is it:

• one person with little influence making one bad decision? (low impact)


• many people with moderate influence making the same bad decision? (high impact)


• one person, or a small group, with high influence making one bad decision? (high impact)

Why do bad decisions happen?
There are several contributing factors in bad decisions, but two which are almost universally present are not considering important information and not examining the assumptions being made. The economic collapse of 2008-2009 (and other events in recent years) presented many examples of these two mistakes when decisions were made:

• assuming that ratings agencies were doing their jobs


• auto companies ignoring the relationship between auto sales and gas prices, while


• assuming that oil prices would not rise significantly


• companies incenting the sale of mortgages to people who would be unable to renew


• assuming that housing markets would always go up, ignoring the possibility of default


• ignoring U.S. trade and budget deficits


• assumptions about currency exchange rates

Most of these are big picture factors, but I expect you can think of some examples in your organization where decisions were made based on untrue assumptions or while ignoring available information. These can be decisions made by individuals, or they can be "groupthink", where a group of people all make the same assumptions and resultant bad decisions. And of course, this continues to happen.

Do you need a crystal ball to predict what will happen in order to avoid bad decisions?
Although I often use a crystal ball in my presentations, sometimes even making predictions and demonstrating "psychic" phenomenon, I maintain that crystal clear thinking is more useful than crystal ball thinking.

Are bad decisions always about making mistakes?
Not necessarily; bad decision making can also result in missed opportunities. This most often shows up due to filters such as "we always do it this way" and "we've never done that before."

How can you help your people make better decisions?
The first thing to understand is that the process people use when making bad decisions is the same process often used when making good decisions. It is natural, automatic, and works most of the time. The goal is not to eliminate this type of thinking, but make sure people recognize its limits and know when to shift their thinking style.
Better decisions require a better thinking process. It is natural for people to make assumptions, ignore information, think short term, jump to conclusions. Unless you have approaches and tools that specifically account for shortcomings in the way people think, you will get mistakes, especially when looking to the future.
I also believe that helping people understand their own natural tendencies in thinking convinces them of the value of these (and other) tools and approaches. In my presentations people learn this experientially, through exercises, optical illusions, brain teasers, and the crystal ball.

What gets in the way of your people making better decisions?
Expecting people to make good decisions without the awareness, training, and tools to do so. And if you add incentives (such as bonuses or stock options, or avoiding conflict with their superior) that reward people when they make "bad" decisions, people's abilities to filter out important information are exaggerated.
Moreover, no two people are looking at a situation the same way. The each have their own experiences, beliefs, education, and assumptions that are filtering how they see the situation and the decisions they make. You have your own filter too, and unless you are aware of it and take it into account when making decisions, two things will happen:
1. you may make decisions based on incomplete or inaccurate information
2. you may think you are communicating clearly to others, but they may interpret things differently
This also points out the need for a clear definition of what your organization values, so individuals can evaluate their decisions against a standard.

What is anticipact™?
Anticipact the name of our program to improve organizational decision making. Anticipact is anticipating, then acting. The anticipating refers to both external factors and internal factors in decision making.
Externally, in the big picture view, it is using tools such as Scenario Exploration and System Dynamics to examine and differentiate between driving forces where the future is uncertain and those that can be predicted. Day to day it can be as simple as thinking through decisions and anticipating how customers or co-workers might react to something you are about to say.
Internally, it is knowing how you and your colleagues think and make decisions and anticipating how your decision making strengths and weaknesses will affect your results. It is about examining and monitoring how your experience, education, opinions, beliefs, values, and assumptions will affect your decisions.
Anticipact is about making crystal clear the factors and the processes used in decision making. It enhances collaboration by incorporating all relevant experience; it speeds decision making by reducing disagreements based on opinions and assumptions; it capitalizes on your people's strengths and knowledge. And it is the most effective approach to planning and executing for the future, especially during times of uncertainty.

How does anticipact™ fit with existing tools you are already using?
Maybe you are using decision making tools such as SWOT, Force Field Analysis, Cause and Effect, Six Thinking Hats, or others. Anticipact does not contradict nor replace them. It augments these tools and makes them much more effective, because now the users understand the value and necessity of the tools. Rather than simply going through the motions (for example, in SWOT analysis, filling in boxes for Strengths, Weaknesses, Opportunities, and Threats) they see how the tools enhance their thinking. They are more able to identify their particular talents and accept the different talents of others.

How is anticipact™ delivered?
Each Anticipact program is customized for your needs. The core concepts of Anticipact are often delivered in a plenary presentation, a workshop, or a facilitated discussion on their own or in conjunction with an already planned event. Scenario Exploration and/or System Dynamics work is carried out with your input and feedback, in advance and during the process. Other components of the program include pocket reminder/reflection cards, private web pages on our site that are customized for your organization, and more.

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