It’s not that we can’t see the future; it’s that we don’t bother.
Granted, none of us can predict it, nor do I presume that some magic algorithm applied to some special pile of Big Data can ease the Fog of the Future.
In part, it’s laziness. Here in the USA, we’re predisposed to the here and now and me, and the rest will sort itself out. As indeed it does. But often not as we hoped.
In part it is because we know from abundant experience that too many pious prognostications by proselytizers of progress have turned to sink-holes of time, effort and money. So why bother.
In management we have evolved the discipline of ‘risk management’ which is part institutionalized experience and part pseudo-science. ‘Risk management’ is somewhat of an oxymoron like ‘military justice’, ‘artificial intelligence’ and ‘virtual reality’. It trades on a figment of truth to create the illusion that it is more than it is.
Risk management has some level of foundation in its effort to deal systemically with known and knowable risks, but today’s world is increasingly subject to unknowable risks for which there is no statistical basis of quantification of either loss, cost of prevention or remediation. But that’s not the real problem.
Many in my profession of accounting and auditing gravitate to the ‘risk management’ mantra, and strive to incorporate it into their mission statement. After all, if you can’t be a ‘risk taker’, being a ‘risk manager’ or a ‘risk something’ is the next best thing. It’s sexier than mere accounting and auditing. And besides, there’s plenty of precedent for the need for ‘risk management’ given the losses that businesses have incurred for themselves, and more frequently for others in their carefully contrived relationships.
But, truth be told, even the growing cadre of risk management acolytes have trouble peddling their wares to the C suite where hype and hope too often trump (no pun intended) reality and even the crudest calculations of probability.
Let’s take a few examples out for a test drive:
- Does anyone see any problem with Jeff Bezos and Elon Musk and Larry Paige and the other space cadets filling the skyways and byways with their latest magical brain-farts without benefit of adequate regulation and incubation for proof of concept within laboratory controlled settings, much less in the free-fire environment of that freaky place we call the ‘real world’?
- Is the latest episode of the Theranos melodrama really a surprise? Or was it the highly probable outcome of a flaky premise sold to incredibly greedy people willing to believe and suspend critical judgment?
- And let’s not beat unduly on Theranos. It’s just one of a number of Unicorns in the magical kingdom of Silicon Valley and other tech redoubts where people with more money than brains can throw it at the wall, hope that something sticks in the lottery of high-tech chance, and praise themselves that their failures are really essential tuition and down-payment for future greatness. In their magical kingdom, failure is virtue. In the real-world, failure gets you fired.
- Where is China going, and where is it taking us? The West lost that gambit four decades ago with an essential, but ill-conceived opening of relations. The drive of corporate greed for access to a billion consumers overtook any attempt of western governments to modulate the normalization in a manner that would minimize the foreseeable disruptions we have experienced economically and strategically. Accordingly, China has grown into an unruly adolescent (in modern world terms, its considerable historical lineage notwithstanding). Given its desperate economic and environmental constraints, and it’s likely belief that its salvation is in expansion, military conflict with its neighbors and the West seems inevitable in the near to intermediate term. Trump and China should easily understand each other: a coercive bully that believes he\it has a right to dominance on its terms without obligations to others. I suspect that this is in part an act China has found it can get away with because, unlike with Trump, no one has yet drawn a firm line in the land, the water or the air that they are prepared to defend (although we are beginning to with questionable allied support). Corporate executives are now marveling at how they could possibly have lost their technological edge (which they often willingly gave away in many cases for access to that one-billion consumer market) and now are losing the market itself in a tightly controlled totalitarian environment where the ‘rule of law’ is more a farce than even a mere political fig leaf of cover. Who’d a thunk?
- Was the Shell Oil retreat from the Arctic really a surprise, or merely unfettered stupidity colliding with reality? When we have so much evidence of failure to properly engineer and install and monitor and regulate and mitigate such ventures in much less hostile and much more stable environments, what would make any prudent executive or government think that Arctic exploitation would be just another hole in the ground? Did BP’s experience give anyone in Shell’s HQ pause for concern?
- How about them GMOs? Scientists are complaining that the average clod on the streets is unjustifiably suspicious of the risks of GMOs. But when we look at the recent history of our ‘conventional’ food supplies, the engineering of obesity, the evisceration of regulatory oversight and quality control, is there not reasonable cause for concern by the public of what will next be foisted upon them in the guise of progress at their ultimate risk and cost? This is actually a case of the person on the street exercising ‘risk management’ in the suspicion that those in the Corporate suite will not. At least, not in the consumer’s behalf.
- And then there’s fracking; a mindless grab for resources beyond any exercise of prudence, with costs to society measured only in financial terms to date, with studied ignorance of the collateral environmental, social and economic costs beyond the measure of defaulted securities.
There are a number of simple questions that executive management could ask itself and save a lot of grief when contemplating a new venture or circumstance, or coping with an existing or intractable situation (like Palestine):
- Has the situation ever happened before, and what can we learn from it.
- Are there any parallels, if not direct precedents, to this situation that can give us a clue of dynamics and outcomes?
- Do we understand the context (historical and present circumstances) of our intended act, and do our assumptions take that context into account?
- Have we tested our assumptions about what should happen if we take this action?
- Have we defined performance standards for our expectations that will give us quick feedback if we’re going off the rails of our expectations.
- Have we asked ourselves how the opposition/competition/stakeholders/regulators are likely to respond, and have we taken appropriate steps to address reasonable concerns.
- What could possibly go wrong, and what’s the worst that could happen….?
- ….and if it does, what are we prepared to do about it?
These are so simple, they don’t even deserve to be sexified as ‘risk management’. They’re basic management, or even common sense. Yet the frequency with which they are ignored and often even disdained by the supposedly educated meritocracy has numbed us of any sense of amazement. Rather, it has implanted a cynicism and contempt and suspicion of all forms of authority: legal, moral, scientific, political, religious, social that accounts more for the rise of Trump, Sanders and Br-Exit than any conventional political explanation.
We could go on, but I’ll trust the point is made, if not accepted. In the corporate, government and personal world, risk-taking trumps risk management more often than not, and often with predictable consequence.
It’s not that our capacity for foresight is so bad. It’s that we don’t bother to seek answers we know we’re probably not going to like. And when they’re thrust upon us, we often find ingenious ways to ignore them rather than to deal with them.
So, to say that hindsight is 20/20 because we have the benefit of knowledge that is not previously available is at best half the truth. As often as not, we just don’t give a damn.
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Word of the day: de-escalate.
Onward
20160710
Integrated Man 