Radical uncertainty – Decision-making for an unknowable future
The heading above is the title of a fascinating new book by Lord Mervyn King, former Governor of the Bank of England, and John Kay, Fellow of St. John’s College, Oxford. Kay and King seek to explain how we cannot know what the future will hold, but we still need to make personal and business decisions in this world of radical uncertainty.
Their conclusion as to what to do chimes strongly with the methodological approach adopted by GFF. Kay & King state that, “instead of inventing numbers to fill the gaps in our knowledge, we should adopt business, political and personal strategies that will be robust to alternative futures and resilient to unpredictable events”.
This is very much in tune with GFF’s ‘narrative forecasting’ approach where we emphasise that; the story is more important than the numbers. Instead of looking at a set of forecasts we need to understand the arguments, theories and assumptions underpinning them. We can then begin to build scenarios as we consider how alternative factors and assumptions will change the future story. This has to be an ongoing process as the story is monitored and an assessment made as to whether alternative scenarios are beginning to come to pass. A set of numbers is a rigid, take it or leave it framework. Narrative forecasting produces a story people can know and understand and then review on an ongoing basis.
With this methodological approach we can help and engage with clients, as they build stories of the future and monitor them. Following this route enables clients to be much more resilient to unpredictable events, because they have looked in great depth at what is predictable – to a certain degree – but also considered what might happen if it doesn’t. This enables us to build strategies stress tested and resilient to alternative futures. It will never be perfect but it is a whole lot better than looking at a line of numbers, that provides no alternative and far too little explanation or discussion.