The Nature of Predetermined Elements

Inevitable Surprises
by Peter Schwartz

(Page 2 of 5)

How do I know all this? Because I have one of the most interesting jobs in the world. I lead Global Business Network (GBN), the world's preeminent research and consulting firm focused on scenario planning. I am also a venture capitalist-a partner at Alta Partners, one of the oldest and largest venture-capital funds. I am also occasionally invited by filmmakers to help them develop the details and plot lines of their films about the future-most recently with Steven Spielberg in the feature film Minority Report, which was released in 2001 and set in the year 2050.

With my GBN hat on I advise major corporations and leading governments on long-term decisions. I help them look ahead and figure out today's actions based on long-term perceptions and insights. I help them see the big surprises, and the driving forces that are shaping the potential futures that may lie ahead. I help them see what is inevitable and where the fundamental uncertainties lie. Then, as a venture capitalist, I place large bets on the future, helping to create the potential tomorrow that I would like to see emerge. Finally, in my motion picture advisory role, I help imagine the consequences of these large-scale trends for the day-to-day lives of ordinary people.

In all three roles I have become increasingly aware of the critical forces that will affect the world, in ways that most decision-makers do not automatically expect. These forces are what scenario planners call "predetermined elements": forces that we can anticipate with certainty, because we already see their early stages in the world today. We know they are inevitable because they have already begun to take place. They are also going to surprise us because, while the basic events are virtually predetermined, the timing, results, and consequences are not. We do not know exactly how these events will play out, or precisely when they will occur. But we can anticipate the range of possible results, and the ways in which the rules of the game may change thereafter.

Scenario-planning exercises, such as the kind I conduct at Global Business Network, often include detailed examination of these kinds of "predetermined elements." Indeed, one of the great innovators of scenario practice, Pierre Wack, used to make them the linchpins of his scenarios for Royal Dutch/Shell in the 1970s and early 1980s. He knew, after intensive study and thought, that inevitable surprises were coming down the pike, and that Shell's success in a turbulent marketplace depended on the company's ability to pay attention to them in advance.

Pierre used to compare his work to the prediction of floods on the Ganges River in India. "From source to mouth," he would say, "the Ganges is an extraordinary river, some fifteen hundred miles long. If you notice extraordinarily heavy monsoon rains at the upper part of the basin, you can anticipate with certainty that within two days something extraordinary is going to happen at Rishikesh, at the foothills of the Himalayas." Three days later, he would add, one could expect a flood at Allahabad, which is southeast of Delhi; five days after that, one could expect a flood in Benares, at the river's delta. "Now, the people down here in Benares don't know that this flood is on its way," he would conclude, "but I do. Because I've been at the spring where it comes from. I've seen it! This is not fortune-telling. This is not crystal-ball gazing. This is merely describing future implications of something that has already happened."1

The same is true for the inevitable surprises in this book. Chapter 3, for example, describes the waves of population migration that are bound to change societies throughout the world in the next two decades. In the United States, English-speaking descendants of Western Europeans will find their majority yet more reduced-which means Americans laws, institutions, and culture is about to undergo a sea change. European leaders will struggle with their own influxes of refugees and Islamic immigrants for years, if not for decades; and China may well face similar issues in Asia. To write this is not fortune-telling; the factors which make these waves predetermined have been visible for years. We've seen them! To be sure, the outcome of those migrations is not certain; but the success of our businesses, our governments, and perhaps even our life choices depends on being able to distinguish the aspects that are certain, and to act accordingly-even if it feels uncomfortable to do so.

This idea for this book was conceived in mid-2001, when I was contacted by Robert Rubin, the former secretary of the treasury under Bill Clinton, and now vice chairman of Citicorp. "We keep getting surprised by big things," he said, "whether it's debt crises in Brazil and Southeast Asia, or busts in the stock market. I'm gathering my advisory board, and my senior management together for a couple of days. Tell us what the big surprises are going to be. We want to avoid them."

At first I was wary. The problem with predicting the future, as every prognosticator knows, is that one's mistakes are remarkably visible in hindsight. But as I researched the possible trends and forces that might affect the future of Citicorp, I realized that many of them were not only plausibly likely to take place, but were predetermined to do so. When I went to deliver the talk, I was amazed to discover that they already had a sense of most of what I had to tell them! Each of them knew some of the facts I had to offer. None of them had put it all together-either separately or in groups-to make sense of the whole story. And thus they kept on getting surprised. But as I spoke, each kept nodding yes, as if to say, "Of course."

There was a lot that Citicorp could learn about the surprises of the future. The facts were not the issue; like most people in responsible positions in significant businesses, they were aware of the facts. But they could not always put them together to see their consequences. And the same is true for the rest of us.

Copyright © 2003 Peter Schwartz, published by Gotham Books, a member of Penguin Group (USA) Inc., all rights reserved, reprinted with permission from the publisher.

About the Author

Peter Schwartz is cofounder and chair of Global Business Network, part of the Monitor Group. He is the author of The Art of the Long View, and coauthor of The Long Boom and When Good Companies Do Bad Things. He has been a leading advisor to governments and major corporations. A highly sought-after speaker for business symposiums, he writes the monthly "Scenario" column for Red Herring magazine.