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The
Fox
Trilogy
Imagining the uninmaginable and dealing with it
Human & Rousseau / Tafelberg
The layout in this digital edition of The Fox Trilogy may differ from that of the printed version. The layout displays optimally if you use the default setting on your reader.
This book is dedicated to
Our families who are our foundation;
Our friends who stand by us in good
and bad times;
Our colleagues who assisted us in producing
the book in such a professional manner;
and
The fox within you – whoever you are,
wherever you are and whatever you do.
Foreword
About ten years ago in June 2001, the two of us co-authored a book entitled The Mind of a Fox. We chose the title to contrast our way of thinking about the future with what was conventionally being taught at American business schools and in the most popular management textbooks. The idea being widely imparted at the time was the hedgehog approach.
What are foxes and hedgehogs? A Greek poet called Archilochus wrote the following line of verse in 650 BC: “The fox knows many things, but the hedgehog knows one big thing”. Why he chose these animals, heaven only knows, but it is certainly relevant for business. For the conventional approach to the future is to formulate a vision (the hedgehog big idea), support it with a mission statement, align everybody to the vision and mission, and march collectively towards them. Focus is the key to hedgehog-style leadership, the mantra being: do not allow yourself to be distracted by side issues, in particular issues which somehow contradict your vision.
The hedgehog concept has merit, but with one huge proviso: the future has to turn out to be more or less like the one assumed in the vision. Then hedgehogs can sweep the board. However, if the future goes off in an entirely different direction, they can lead a company collectively over the edge of a cliff. They either win or lose big time; which is the cue for the foxes to come into play in designing corporate strategy.
Foxes believe that the future is unpredictable and many elements are beyond the control of the individual or the organisation thinking about the future. The key is therefore to prepare yourself for anything the future can throw at you, be it a shift in economies or markets, a breakthrough in technology, a political revolution or a natural calamity. In other words, you have to road-test the vision and strategy against a range of scenarios. This will ensure that you know in advance what adaptations you have to make if any of the possible futures that you entertain emerge as reality.
The quality and speed of your response will thus be enhanced to cope with even the most extreme course of events. As we put it, you will have imagined the unimaginable and learned of ways to deal with the opportunities and threats contained therein. You will have a grasp of the drills to survive the black swan scenarios and thrive in the white swan scenarios. Charles Darwin would have approved of this foxy approach, given that markets change much faster and more dramatically than Nature. Just ask yourself: how many businesses are around a century after they were established? Very few because the vast majority did not have the foresight to adapt to the changing times. So they went extinct or were taken over.
Incidentally, we stress that the scenarios do not have to capture the future exactly. They need to open the minds of the individuals making the decisions to the fact that there are other paths and other options. As the legendary scenario planner, Pierre Wack, once said: “It is much better to be vaguely right than precisely wrong!”
Moreover, foxes do not just write scenarios. They also want to make decision makers aware of the clues that the future always has on offer to signify imminent change. They therefore put as much effort into identifying the flags which would indicate that one is moving from one scenario to another. They are continually searching for the tipping points or beginnings of something new that might usher in a completely changed environment. Then, based on the disposition of the flags, they attach subjective probabilities to the scenarios. When the probabilities rise, they connect the dots by calculating the impact of the scenario on the organisation concerned and what it should do about it – now and in the future. After all, scenarios without a plan of action are just daydreams or academic fantasies lacking substance.
In short, foxy leaders reduce the risks inherent in volatile markets and uncertain times by having many ideas about how the future can pan out. They constantly watch the flags to see which idea is about to come into play. They 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.
Examples of how we ourselves have used the technique that we advocate are as follows:
1.The publishing of a ‘High Road’ scenario for South Africa in mid-1987. The theme was that the ruling government would negotiate a political settlement with the genuine black leaders, and South Africa would re-enter the global economy as a full-blown democracy. The flag was the release of Nelson Mandela. It went up in February 1990 and democratic elections were held four years later. At the time the scenario was published, it was considered a fairy tale. Within seven years, the miracle happened.
2.The incorporation of a ‘Gilded Cage’ scenario into our letter to George W Bush in The Mind of a Fox in June 2001. In this scenario, a massive terrorist attack on a Western city was anticipated which would precipitate among other things a security clampdown on immigration into the US. The flags were the rise of Fundamental Islam (see the postscript in the book); the better organisation of terrorist organisations in places like Saudi Arabia; and the two attacks on US embassies in Africa in 1998 which could be regarded as a dry run for the real thing. The 9/11 attack on New York occurred three months after we published the warning to Mr Bush in our book;
3.The inclusion of a ‘Hard Times’ global recession scenario in our second book Games Foxes Play that hit the bookshelves in April 2005. The flag was a decline in property values in the US causing American consumers to stop borrowing and curtail spending. After all, a middle class American’s house is his or her biggest asset. The resultant drop in consumer expenditure would trigger a crash in the US economy followed by one in the world at large. The flag went up in January 2007 when the property index declined for the first time in 20 years. The rest is history; and
4.The listing of major smacks from Mother Nature as a breaking future for 2011 in an article written for the website News24.com in December 2010. So far this year we have had the floods in Australia and the earthquakes in New Zealand and Japan. The flags for the severe consequences of these events were the increasing density of population in places at risk together with the growing interdependence of the global economy.
During the last ten years, we have done numerous sessions world-wide using this methodology to test the viability of an organisation’s strategy against the various extreme futures hypothesised. We often say to people that we cannot make their fears disappear, but we can structure them in a way that makes them easier to handle. The global financial crisis undoubtedly boosted the popularity of our approach because of the anxieties created by it in the minds of those who plot strategy. The latter now recognise the need to be open-minded and flexible in a way that was not apparent before the crisis. They want to diminish the chance of failure and hedgehogsized losses.
We have also written two further books which are featured in this fox trilogy. The second is called Games Foxes Play because we feel the metaphor of a game is a useful one to apply to business. Like sport, business has competitors, rules and game-changing uncertainties; and just as you win, lose or draw in sport, you make money, lose money or break even in business.
However the most important thing is to choose the right game. As we remark with a wry smile, it is no good being world badminton champion because very few people watch the sport on television. You are the best in the world but you don’t make much money.