The idea is that a group of managers sit around and dream up scenarios for the future, changing one or two variables in each to create different possibilities. Paul J.H. Schoemaker, now a teacher at Wharton Business School, identifies overconfidence and tunnel vision as the main risks to managers making decisions. His article in the Sloan Management Review focuses on the advertising industry, but its principles apply across the corporate spectrum.
He quotes several experts at their worst moments, when they made sweepingly wrong predictions for the future. For example, during World War I, when Gen. Billy Mitchell proposed that airplanes could sink battleships, US Secretary of War Newton D. Baker scorned the thought. “That idea is so damned nonsensical and impossible that I'm willing to stand on the bridge of a battleship while that nitwit tries to hit it from the air,” he said.
Looking into the future is hard work, and it's made harder by the tendency of people to grade their own intelligence and adaptability skills higher than would an impartial observer. And even when the critics hail you, it still pays to be humble.
Charlton Heston once related his experience acting in a Broadway play with Laurence Olivier. He said they were sitting together at the first-night party waiting for the reviews, which came in negative. Heston leaned over to the old master and said it must take some discipline to dismiss bad reviews, to which Olivier replied that it was just as important to dismiss the good ones.
Even if the salary and perks tell you you're a star, your performance will benefit if you think twice before making pronouncements from your own little Mt. Olympus. Ken Olson, the head of Digital Equipment Corporation, could have used this advice in 1977 when he said, “There is no reason for any individual to have a computer in their home.”
Schoemaker recommends that when contemplating the future, we consider three classes of knowledge:
Things we know we know. Things we know we don't know. Things we don't know we don't know.
He says that various biases affect all three, the worst being the human tendency to look for evidence that confirms our preconceived notions, but that focusing on the second and third categories reaps the best results. The author concludes that scenario planning excels here because it is essentially a study of our collective ignorance. Expressing his idea in more positive terms, Schoemaker says, “The scenario method continually pushes the envelope of possibilities since it views strategic planning as collective learning.”
This reminds me of Carl Jung's work exploring the collective subconscious, the pool of archetypal images common to all humans. Does some of that qualify as things we don't know we don't know? This peering into the future business gets deep quickly; I'm not sure I can swim in these waters.
Maybe we can turn back to concrete things, get a toehold on solid ground. Scenario planning can also mean the process of making a film, telling a story with images and words. The director Mike Nichols says the important stuff is the dreamlike unconscious, the event no one is acknowledging, the hidden reality, the themes beneath the surface. He says you can reverse the unconscious process and actively pull material up and out of the dark.
Well, that didn't move me an inch closer to solid earth. But that's what exploring the future is all about, standing on unstable ground, on clouds, imagining hypothetical situations. Business people can learn from creative people, from artists and writers and filmmakers, for these individuals make a habit of exploring the unknown, of imagining different scenarios. If anyone needs advice, I hereby announce that I am writing a screenplay.
My scenario is not finished yet, and I don't have an agent or know a soul in Hollywood, but I did buy a special display stand for my Oscar, plus a chamois cloth to make the golden statuette gleam. Tell me, objectively, have I fallen into the overconfidence trap?
