It is not written in the stars — methods used by foresight professionals

Forecasting the future is a skill that humans have been trying to develop since the beginning of time. However, even with modern quantitative approaches, forecasting a single future can prove fatal. By working with foresight in relation to alternative futures, leaders are engaging with uncertainty as an opportunity. Angela Wilkinson, Senior Director with the World Energy Council, and Betty Sue Flowers, Emeritus Professor at the University of Texas, focus on some core elements that foresight professionals of today use to generate insights about possible futures.

By Angela Wilkinson, World Energy Council, and Betty Sue Flowers, Emeritus Professor at the University of Texas, Austin

Forecasting: building on the past

The most important responsibility of the leader of any organization is to think about the future and to design ways that the organization can thrive within it. From that perspective, every leader is in the business of foresight — usually with the help of professionals. In the ancient past, these professionals did use crystal balls, or the entrails of sacrificed animals, or the patterns of stars to predict the future. In modern times, professionals are more likely to extrapolate the trends of the recent past into the future and give the leader or CEO a more or less useful forecast.

Quantative forecasting is still the most common method of predicting a single, most likely future, even though it can produce dangerous and deeply flawed results. The danger comes from the complacency that forecasts generate, based as they are on the assumption that the future will be like the past. The only thing we know with any certainty about the future is that whatever it will be, it will not be like the past. In other words, the future is uncertain, and uncertainty creates anxiety. Forecasting alleviates anxiety in that it is an organized, data-rich way to go wrong with confidence.

Forecasting has other advantages as well. It reduces uncertainty into quantifiable and manageable risk. In addition, it’s linear, and human brains are hard-wired for linear thinking. This linearity makes it a natural fit for working with cost-benefit analysis. Assuming that the future will be like the past in predictable ways also avoids a challenge to the status quo, which is usually more comfortable for the powers-that-be as well as their corporate partners, who, like all of us, prefer to avoid thinking about the possibility of unpleasant surprises.

Foresight: capability towards a flexible and creative future orientation

Foresight, which is not the same as forecasting, requires the building of new organizational capabilities. While forecasting can be valuable, especially in the short term, foresight professionals know that what organizations need is not simply a crystal-ball vision of the future, but the organizational capacity for engaging in a process of social learning that leads to a flexible and creative orientation to the future. Such an engagement with the future takes a number of forms, but four of them, in addition to forecasting, are of greatest use:

Source: European Commission.
  • Megatrend identification;
  • Horizon scanning;
  • Scenario building;
  • Visioning with back-casting.

Megatrend identification: new pattenrsn with unfamiliar impacts

Megatrend identification helps loosen up forecasting to include combinations of different trends that might interact in new ways to produce new patterns with unfamiliar impacts. Imagining possible pattern shifts can also disconnect leaders from the habit of looking at forecasts as isolated linear trajectories.

Of course, megatrends cannot provide the assurance of the numbers that can be attached to single-trend forecasts. Instead, leaders have to develop the capacity to see possible larger systems at play, some of which might include elements that seem to have no direct bearing on the future of a particular organization, but have a very significant impact when combined with other trends. Using megatrends, leaders and their organizations can, working with qualitative futures narratives, to start to ‘think outside the box’ of the expected, forecastable future by asking ‘What if (the pattern shifts)? So what? (How, when, and with what impacts?) What does it mean for us? What now? (What options for action and with what impacts?) What does it mean for us? What now? (What options for action?)’

Horizon scanning: signaling potential trends and trend breaks

Horizon scanning resembles the identification of megatrends — but in reverse. Megatrends are important trends arising from the present, which are likely to affect the future; horizon scanning looks at weak signals ‘coming from’ the future rather than the past or present to see trends that are starting to bend or break and what new trends might emerge. Dialogues about outlying technologies or nascent political or social movements can be stimulating in themselves, but horizon scanning is of limited usefulness unless it is linked to other processes, such as scenario building.

Scenario building: using plausible futures to engage uncertainty as opportunity

Scenario building, like forecasting, creates fictions about the future, but these stories differ from forecasts in three very important ways. First, while scenarios must be plausible to be useful, and while they often employ data-based research for their content, they are not extrapolations of present trends. Many times, in fact, they challenge those trends, introducing ‘bends’ in the trends designed to challenge forecasts in useful ways.

Second, they always come in sets, usually of two to four. A scenario is not a picture of ’the’ future but is presented as one of several different possible futures. If each scenario in a set of scenarios is equally plausible, then the leaders for whom the scenarios have been created cannot choose a future to believe in, but must act as if any of them might come true — or any of a number of other futures. The practice of testing strategy within the different futures presented by the scenarios trains the minds of leaders to treat the future as a necessary fiction rather than as a prediction.

Third, the key purpose of a scenario set is the creation not of the stories in themselves, but of a platform for rich and wide-ranging dialogue that will bring assumptions to the surface. Scenarios are designed to encourage constructive engagement with uncertainty in order to avoid missed opportunities and blind spots. Such dialogues can lead to a shared sense of a desirable future that a team wishes to move towards, even in the face of this uncertainty.

Among the many subtle by-products of engaging with scenarios is a greater sense of confidence in relation to an uncertain future. This confidence is quite different from the feeling of security that arises from accepting a single predicted future as ‘true.’ It is related, instead, to the capacity for agility and resilience — getting ahead of connected challenges through imagining different potential paths.

One of the most profound uses of scenarios is as a stage for dialogue on extremely complex, contentious issues. Where there is deep disagreement, a wide-ranging, open, and honest discussion is almost impossible under normal circumstances. Champions of one side or another must consistently argue their strongest position, for example, and often it is politically dangerous to step into the shoes of an opponent to explore how the issue might appear from another point of view. In most such politically charged situations, discussions quickly become arguments; or, if the atmosphere is congenial, the ‘elephants in the room’ are politely ignored.

In such a situation, a team comprised of people from many different perspectives can create scenarios together even when they cannot agree on policy positions. After all, scenarios are only stories. Any team member can create a story from another point of view. Often, in the process of creating that story, those who hold an opposing position begin to understand the other point of view and to see possible opportunities for collaboration. A different kind of listening occurs, and often, a shared understanding emerges.

Ideally, scenarios are created by a team that represents the whole of the organization. From this divergence of viewpoints sometimes a vision of a preferred future arises — and then foresight actually leads to a design for the future rather than simply a reactive attempt to predict it. Once a vision has emerged, a pathway from the future can be built back to the present.

Visioning with back-casting: not prediction, but aspiration to implement imagination

Visioning with back-casting can translate a symbolic picture of the future into a rational strategy and functional plan with actionable milestones and budgets.

Creating such a vision and stress-testing it against different future contexts (scenarios) that would include the results of forecasts and megatrend analyses would require the use of all these methodologies. An inspiring and actionable vision of the future is, after all, what leaders need to give us. In effect, it is the leaders who show us the picture of the future in the crystal ball — not as a prediction but as a powerful aspiration. The future is not for seeing, but for creating.

Towards a futures-centric auditing profession?

Auditing is a retrospective activity — looking back to assess whether financial aspects of decision making by leaders and organizations have followed the agreed rules of accounting and, if relevant, cost-benefit analysis. Auditors engage with the push of the past but, as yet, are not equipped to work with the pull of the future.

What social need and purpose would a futures-centric auditing profession serve? Would the emphasis be on demonstrating social benefits of economic efficiency and/or anticipating the return-of-investment in terms of human-centric wellbeing and social flourishing? Such a shift would also require a new leadership culture, not just a change of tools. Building an organizational futures muscle — that is, a strategic foresight capability — would involve grappling with the quality of imagination and social learning processes involving inter-subjective judgements, rather than relying on the numbers alone to speak the organizational futures muscle — that is, a strategic foresight capability — would involve grappling with the quality of imagination and social learning processes involving inter-subjective judgements, rather than relying on the numbers alone to speak the truth.

This article was first published on the October 2018 of the ECA Journal. The contents of the interviews and the articles are the sole responsibility of the interviewees and authors and do not necessarily reflect the opinion of the European Court of Auditors.




Articles from the European Court of Auditors, #EU's external auditor & independent guardian of the EU's finances.

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Articles from the European Court of Auditors, #EU's external auditor & independent guardian of the EU's finances.

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