Wednesday, March 4, 2009

Scenario Planning: Interesting but Impractical

Virtually everyone involved in association management probably has been involved in strategic planning exercises. A major component of such exercises is the discussion of likely and not-so-likely social, political, and economic events that might influence our lives and the ways in which our associations will operate. These tips-of-the-hat to the future are among the most intriguing to me, probably because I find it interesting to try to analyze the chain reactions that might come as a result of a significant change in just one element of our business lives. Invariably, though, I come to the conclusion that the complexity of our world, and the relationships within it, is too great for anyone among us to ever get the predictions right. While scenario planning is interesting, it is probably most useful as a tool to improve our analytical skills, rather than as a tool that can truly help guide our associations through uncharted waters.

Recently, I listened to part of an interview on our local PBS station with George Friedman, president and CEO of a company called STRATFOR, a private intelligence company. Friedman also is author of a just-released book entitled, The Next 100 Years: A Forecast for the 21st Century.

Friedman posits that the changing demographics of our society* will have a radical effect on the United States as a society. Those demographic adjustments, coupled with geopolitical transformations (that, he argues, are underway and easily can be seen) will bring about massive change. He suggests that China is destined to split apart and to watch its communist philosophy and means of control diminish to the point of disappearing. He says the current battles to keep Mexican and Central/South American immigrants at bay will cease. Instead, he says it is an "arithmetic certainty" that in 30 years labor will be scarce and we will have to incent people to come to the U.S.

*a birthrate that is dropping dramatically, an aging workforce that requires replacements to perform the jobs from which it is retiring and to perform additional services it wants, etc.

I found myself being drawn in by his predictions and allowing myself to think "big thoughts" about almost incomprehensible changes that will take place in the next hundred years. I began to wish that I would be around to witness these massive shifts in global society.

But then I started questioning how realistic, how plausible, how likely Friedman's predictions really are. I concluded that virtually all of them are possible, virtually all of them are plausible, but that virtually all of the predictions further out than 5-10 years are pure conjecture and not worthy of serious discussion. My reason for coming to the conclusion that his predictions are pure conjecture? Back to my original point: the world we live in is far too complex and we are insufficiently capable of understanding the reality of "cause and effect" to have more than a minor statistical chance of being right in trying to predict the future. In fact, our capabilties have not yet evolved to the point to which we are particularly good even at predicting the past.

Let me hasten to add that I have not read Mr. Friedman's book. I might yet do so and I may very well be highly entertained by it, but I don't anticpate that I will be persuaded by it.

The lesson here is not to abandon scenario planning, but to recognize it for what it is and to avoid putting too much stock in our ability to see the future in our imperfect crystal balls.