By Rob Downey
Clem Sunter spoke at the February, 2011 ICBA Conference in Johannesburg, South Africa. He is a successful businessman, former Chairman and CEO of the Gold and Uranium Division of Anglo American Corporation, and a renowned corporate scenario planner. With Chantell Ilbury, he published the best-selling trilogy: The Mind of a Fox, Games Foxes Play, and Socrates and the Fox. The ICBA audience found Clem and Chantell’s views about planning pertinent to our industry. As we collectively emerge from the recent recession, I want to share a slice of what it was that intrigued ICBA independent brokers about Clem and Chantell’s ideas on scenario planning.
What is the “mind of a fox”? In 650 BC, the Greek poet Archilochus wrote, “The hedgehog knows one big thing whereas the fox knows many little things.” Traditionally, businesses take a hedgehog approach to the future by formulating a vision, supporting it with a mission statement, aligning everybody to the vision and mission, and marching collectively toward these.
Companies – especially American companies – have used the hedgehog approach successfully for years. However, when using the hedgehog concept alone, the future must turn out to be more or less like the one assumed in the vision. If the future goes in a different direction, the hedgehog concept alone could lead the company collectively over a cliff with potentially disastrous results – and this is where the foxes can come to play within corporate strategy.
Foxes believe that the future is unpredictable and many elements are beyond the control of the individual or company in planning for the future. Therefore, the key is to prepare oneself or the company for anything the future could hold. In other words, you have to road-test the vision and the strategy to ensure that you know in advance what adaptations you have to make, if, in fact, any of the possible futures that you have painted as scenarios materialize. If this is your approach, the fox approach, the quality and speed of your response will be enhanced to cope with even the most extreme shifts in events. You will have imagined the unimaginable and learned ways to deal with the opportunities and threats therein.
Moreover, foxes do not just write scenarios. They put as much effort into identifying the flags, which indicate they are moving from one scenario to another, in other words, the tipping points or new beginnings that ushers in a complete change. Then, based on the disposition of the flags, they attach subjective probabilities to the scenarios. When the probabilities rise, foxes connect the dots by calculating the impact of the scenario on their organizations and what they should do about it, now and in the future. The steps are straightforward.
- Identify the current scenario
- Look at the possible pathways that could lead to the other futures and convert them into plausible scenarios
- Select the flags that would suggest movement from the present scenario into the others
- Based on whether the flags are up, down, or at half-mast, assign relative probabilities to the various scenarios
- Finally, on a balance of evidence before you, survey your options and make the most appropriate decision
Each scenario should be a unique, internally consistent narrative that requires its own special response. Foxes adapt faster than their competitors to new circumstances. In short, foxes reduce the risks inherent in volatile markets and uncertain futures, by simultaneously entertaining many different possibilities. They constantly watch the flags to see which possibility is about to come into play. Foxes are as necessary to any business as visionary hedgehogs and it is the debate between the two that produces the optimum strategy in the long run.
By using a combination of the hedgehog and fox approach, companies can better prepare themselves for the future and minimize risk of failure, disaster or loss from multiple sources and multiple directions. “Fox” thinking is increasingly important in time periods such as the one we are now in. This is the day, now is the hour to feed your inner Fox. To learn more about the book and the authors, you can visit their website at www.mindofafox.com.
(Rob Downey is one of the founding partners of International Risk Consultants, Inc. (IRC) www.irc-group.com – a globally-integrated trade-finance and credit insurance specialty brokerage, which serves as the operating member of ICBA for Asia, Brazil, India and the USA)