Situation normal all futured up (SNAFU) with Sanjay Khanna

What is a scenario?

“Scenarios are really plausible fictions that you can compare and contrast that may have very many similar elements to them, but the degrees of those elements may vary. And what you’re trying to do is use that as a fiction to come back to the present and see what the blind spots are today. So although they’re couched in the future, all scenarios are really about the present.”

Combatting Converging Crises:

“The idea is that you have to address each element of the crises quite aggressively, otherwise, inequities could limit your ability to adapt to climate change, not addressing climate change could affect your ability to deal with people made socioeconomically vulnerable by global change and by national issues.”

Why many businesses aren’t ready for a chaotic future:

“Prior to this, most organizations had been trained in functional silos, and became very masterful at financial engineering, at financialization of different aspects of their businesses, at a lot of short-term strategic thinking. But this interconnecting, converging crises [context] means that you need synergistic solutions on the other side that can, like a vaccine, help to hit and protect enough systems [so] that you can still respond well to the environment.”

Hiring for the Future

“In our hiring practices, we’re going to need to look for a new cognitive skillset that we’re going to need to test for and evaluate people for coming into an organization.”

Behavioural Science x Strategic Foresight

“I think behavioral science will show that we have a big gap in our understanding of behavior at a population scale. That needs to be understood by decision-makers, because then, from a scenario standpoint, there could be scenarios where you do a lot to prepare [people] before the technology and prospective decision-making support systems are there.”

Brooke: Hello, everyone, and welcome to the podcast of The Decision Lab, a socially-conscious applied research firm that uses behavioral science to improve outcomes for all of society. My name is Brooke Struck, research director at TDL, and I’ll be your host for the discussion. My guest today is Sanjay Khanna, futurist, strategic advisor, and climate risk expert. In today’s episode, we’ll be talking about converging crises and adapting to uncertain futures. Sanjay, thanks for joining us.

Sanjay: Thanks for having me.

Brooke: Please tell us a bit about yourself and these convergent crises or these converging crises that you’ve been working on.

Sanjay: Hello, and it’s great to be part of this podcast. My background is in strategic foresight, but my path to becoming an expert in scenario planning started as a writer I had a young child at the time. My master’s degree was in creative writing. I didn’t want to sell poetry to pay for diapers. So I ended up taking a flight to Palo Alto, and just randomly showing up at the head office of Hewlett-Packard Company. And I went into HP and I asked a security guard if the gentleman knew anyone upstairs in communications. And a person who did communications work for Dave Packard and Bill Hewlett came downstairs and had a slot in his calendar for me of about a half hour or 45 minutes, and he gave me a tour of the HP offices where he worked in the communications area, walked me around past Packard and Hewlett’s office. And he said, “I want to give you a shot at writing something.”

Sanjay: And the first thing I wrote about was work-life balance at HP. And the pitch for that article ultimately came from my going to Amsterdam, to a conference called Doors of Perception, where I saw the architect Rem Koolhaas talk about what was happening with Chinese cities and how fast they were being developed, land was being razed and cities built off these razed plots of five-square-kilometer plots of land. And was on this theme of sort of massive accelerating change. And this conference brought together technologists and architects and designers and all these allied professionals and data experts in population health, wellbeing, and global change.

Sanjay: And that set me off on a trajectory of trying to understand what was happening to the world in this background of accelerating change. And so, I got to be known in Silicon Valley as being good at looking at intersections between business, culture and technology. But as globalization continued to take root, and the environmental and ecological consequences of that became more clear and the climate science became more unequivocal on the human impact of climate change, the human fingerprint, I started to integrate ecological, environmental and climate work into my thinking about how the world was shifting and changing.

Sanjay: That led to independent work with Nokia on the future of play and gaming. I did a little research stint at the Palo Alto Research Center at Xerox. I did work on the future of robotics and automation, sort of very early, and predicted in the mid-2000s that the rise of high-speed networks and social media might mean that more poor decisions were made more quickly and at a greater scale than at any time before in human history, and that the gamification of population-scale decision-making may play out in the digital sort of sphere.

Sanjay: So I’ve been thinking about these interconnections for a long time. And as you can see in that last piece, it’s about decision-making. And so, behavioral science became a big part of how I thought about things playing out. And just by reading a lot, like Daniel Kahneman, and behavioral scientists looking at neuroscience of how people actually make decisions in contexts of increased stress and chronic stress. Those are all factors playing out in our society today, and they can then feed into scenarios and scenario planning, so you have a broad evidence base of research that you can bring to the kinds of questions that we’re thinking about.

Sanjay: And really, the issue with scenarios is, what are the blind spots today? Scenarios are really plausible fictions that you can compare and contrast that may have very many similar elements to them, but the degrees of those elements may vary. And what you’re trying to do is use that as a fiction to come back to the present and see what the blind spots are today. So although they’re couched in the future, all scenarios are really about the present.

Brooke: Right. So that brings up some really interesting questions about evidence-based decision-making. Evidence, by definition, is always about the past. So when we talk about evidence-based decision-making or informed decision-making, if we’re trying to look prospectively, we’re inherently looking at something for which data does not yet exist. So we want to be putting together a scenario that will help us to think through what decisions we need to make right now to be prepared for various futures. But not just any scenario will do. So, how is it that we build robust and plausible scenarios, and how do we assess the robustness and the plausibility of them?

Sanjay: The scenario process that I use, the methodology, is called the Oxford scenario planning approach. And one of the tenets of that approach is that the plausibility of scenarios is, in part, a social multi-stakeholder process. And so, in working with various stakeholders to understand what the evidence is that’s being used to inform the scenarios, and what questions the users of the scenarios have, one of the key other elements is defining who the user is of the scenarios, and what the use of the scenarios is.

Sanjay: And then, you build a multi-stakeholder process, who needs to be involved to develop this, and how do they co-create an environment where they can stretch the bounds of what they think is possible by looking at what’s plausible? So the plausibility is to really stretch things so you can consider a range of plausible futures, and then use that to inform your strategy development today, and link that potentially to your operational and other processes inside your organization.

Brooke: Yeah. So, that’s a good pivot point, right? We’ve got this multi-stakeholder approach, and it’s very much problem-driven. It’s very much decision-driven. So, it’s the use case that really pulls a lot of this. And once we’ve got that good, rich scenario or that set of scenarios, how do we actually translate those into effective plans to do something in response to what we’ve learned? So, there’s a lot there, so let’s start with, internally within an organization, we often have some infrastructure within an organization that helps to take a strategic decision that’s been made and push that through the organization so that it filters down into all the nooks and crannies where it needs to live. But when it comes to these scenarios that are inherently about the future, they’re about something plausible, not something that’s actually already happened.  I can easily imagine some difficulties mustering up the energy within an organization to mobilize real change around what can be, perhaps, too easily written off as just some story we wrote. So, how do you go about the process of building that internal momentum to get things to actually change in response to these?

Sanjay: In part, it depends on where the impetus for the scenario development is coming from inside an organization. Is it coming from the corporate strategy group? Is it coming from the office of the CEO? Is it coming potentially from the board of directors, or is it around potentially a business unit that wants to develop scenarios that could affect its business strategy, help gain a competitive edge, help build resilience? So, there’s a lot of work now being done on, for example, procurement and supply chain resilience, and how that feeds into corporate strategy, and how that may become a board oversight sort of concern, as well.

Sanjay: And so, where it comes from really matters. The executive sponsors and other allies within the organization are important, but also the stakeholders outside the organization that are engaged with. So, part of this process is to imagine that there are a whole bunch of things in the external environment that are not in the organization’s control. It could be macroeconomic factors, they could how climate change is really affecting things on the ground. It could be related to a real shift in customer behavior and how customers are reacting to products, services, and solutions in a changed context.

Sanjay: And what the scenario planning process is about is to say, “Let’s look at the factors in these scenarios that we can’t control, and then imagine them hitting our transactional environment where we work with employees, with customers, with regulators, with lobbyists, with government in other ways. And then, as the organization using the scenario planning, how does this affect our relationships with all these actors in our transactional environment?” So, the contextual environment is what you can’t control, the transactional environment is where you have some influence in relationships.

Sanjay: So, part of what scenario planning is about is to use that process to build new relationships that could enable value co-creation with new partners or new stakeholders that are in a better position to adapt to the level of turbulence, uncertainty, novelty and ambiguity that’s inherent to the converging crises context. So, getting back maybe to your introduction to me on converging crises, I wrote a paper for the law firm Baker McKenzie prior to my departure from the firm. And it was called Unprecedented Converging Crises: Foresight View. t was released in November 2020.At the same time, a number of other documents were published that were pretty high in the Google search ranking, one by The Lancet on COVID-19 and converging crises, one in Rolling Stone about the converging crises context, one on the political economy and converging crises. The Biden administration transition team scooped up these documents and looked for patterns in what were consultants and others putting out around this time.

Sanjay: And so on the whitehouse.gov webpage, I’m told, our paper and some other papers influenced the Biden administration writing in their priorities that they would help Americans address converging crises, from the pandemic, to racial inequities, to America’s standing in the world. And the idea there was that you have to address each element of the crises quite aggressively, otherwise, inequities could limit your ability to adapt to climate change, not addressing climate change could affect your ability to deal with people made socioeconomically vulnerable by global change and by national issues.

Sanjay: And so, the role now in this converging crises environment is to think about, in that transactional environment, how can we have as much impact across the spaces that we influence, to address multiple crises simultaneously? So, it’s a major task, and that’s why foresight is so, so important today. Prior to this, most organizations had been trained in functional silos, and become very masterful at financial engineering, at financialization of different aspects of their businesses, at a lot of short-term strategic thinking. But this interconnecting, converging crises means that you need synergistic solutions on the other side that can, like a vaccine, help to hit and protect enough systems that you can still respond well to the environment. So, it’s a big task.

Brooke: So, just to put some signposts here, the original question was about how we assess the epistemological qualities of the scenarios that we build. And then my second question was about how we develop the political momentum internally within an organization to move those forward. It sounds like your answer to both of those questions is actually related to the process of how the scenario itself is built. So, you get the right people around the table to articulate the scenario. And having the right people around the table also is part of what helps to develop the momentum that you need, that, for instance, if there were a key functional representative within an organization that weren’t around the table during the scenario design process, you would effectively create two problems.

Brooke: The first would be that the scenario itself would potentially be deficient in their area of expertise. It might be a stool with four legs, one a little bit too short for the others. And the other is that once the scenario is put together, you might have difficulty getting that person who’s got this critical role to play onboard with something that they weren’t involved themselves in developing. Is that about right?

Sanjay: Yeah. No, that’s very good. And the multiple stakeholder aspect, in terms of going outside your organization as you do your research and identify where the blind spots are and where new relationships may need to be developed to co-create value in a turbulent environment. That part starts to be important too, who do you bring into the process, and how do you work with and against the politics and blind spots inside your organization?

Brooke: Right.

Sanjay: Meaning, there could be key stakeholders who are so blinkered in how they think that they could disrupt that process. And so, then the question is, how you include, exclude, engage? Maybe in a certain situation, you’ll interview that person and make sure it’s a very fulsome interview and incorporate some of that work. But in the actual process that could be blocked, the workshops and so on, you might not include them in that process.

Sanjay: And so, part of it is how important are the strategic questions to the organization in terms of this having momentum and really feeding into the strategy process? And there are elements here of board governance, of C-suite engagement and of other engagement that can have an impact, particularly in this environmental, social and governance environment where boards are trying to consider what their roles and what the limitations of their roles are in looking at the long-term.

Brooke: So, I like that you bring in this element of collaboration and engagement beyond the boundaries of the organization that might be leading this exercise. When we’re dealing with these extremely challenging issues, these wicked problems, it’s not through any one kind of functional lens within an organization that we’re going to solve it, but it’s also probably not through any one organizational lens that we’re going to solve it. If we think about something like climate change, for instance, it’s so multifaceted. There’s no single actor, no single industry, even, that can tackle this whole thing on their own. So naturally, then, we need to be reaching across those boundaries.

Brooke: So part of the challenge there is, once again, establishing the political will within an organization to reach out and engage with stakeholders who are not necessarily traditionally considered as partners, maybe because they’re so far afield of our core business that we just don’t think much about them at all. Potentially, it’s because we view them as competitors, either within our own space or within a close, adjacent space. So, if we leave the political question aside, because we’ve talked about that a little bit already, even once the political will is developed, how do we start to create the operational capacity to collaborate or to put in motion the kinds of endeavors that we’ve built a little momentum behind?

Brooke: Just to illustrate the question that I have in mind there, if we think about the role of finance in addressing climate change, there seems to be, in the last year, year and a half, certainly, a big upswing in interest from investors, both institutional and individual investors, to make investment decisions that take climate into account, in a way that they didn’t really consider all that centrally, say, five years ago, but even more recent than that. But even though there’s all this energy and momentum behind a desire to do differently, the mechanisms don’t yet exist for us to robustly assess what the climate impact is of a given investment decision versus an alternative decision. So once we have that momentum behind us, how do we go about making sure that the kind of nuts and bolts and systems are there to actually support the kinds of decisions that we want to make and the kinds of collaborations that we want to undertake with these external partners?

Sanjay: In the prospective thinking space, you talked earlier about evidence-informed or evidence-based policy-making, decision-making. And in this particular sort of question that you’re asking, I think the political will is challenging to build in this environment. But also, as you said, the socio-technical connection between that and actual decision support technologies is also challenging to do. So you’re seeing a lot of work in software, for example, to try to tease out portfolio risks.

Sanjay: And I’m an advisor to a company that’s trying to do that, to use a really huge, big data approach on petabytes of data, going through scientific papers on climate change, going through socioeconomic scenarios, developing scenario dashboards; not of the kind that I talk about in terms of scenario planning, but more technical scenarios that capture expert opinion as well as scientific data and socioeconomic scenarios, and then give decision-makers some options from a portfolio standpoint, and being able to model what some of the impacts might be.

Sanjay: But that’s hard to prove out. And a lot of decisions can be made without all of those decision support systems. Some of the decisions are really, fundamentally based on precautionary principles around being protected before the technologies are perfected to address these things, because the risk is that if you wait too long for a certain area of development to potentially save you, you will have missed all the opportunities to change your behavior in the present in ways that would make you more resilient prior to that happening.

Sanjay: So, this is very much akin to a person deciding at a certain age of their life, after they’ve faced a number of illnesses that relate to a lack of physical exercise, maybe a lack of social relationships, and they decide at the last minute, when all the health indicators are running orange or red, that now’s the time to improve their health. If you look at what’s happening on a planetary scale, there are lots of reds and oranges on the map around biodiversity, around environmental degradation, around population health impacts of COVID, around social inequities. And people think you can just come up with a solution that seems smart and scale it.

Sanjay: I think behavioral science will show that we have a big gap in our understanding of behavior at a population scale. That needs to be understood by decision-makers, because then, from a scenario standpoint, there could scenarios where you do a lot to prepare before the technology and prospective decision-making support systems are there. And so now that they’re there, you can actually do more than you could have done if you waited til that piece was done before you changed your organizational mindset.

Brooke: So, let’s dive into that, some of the relationships between this approach to risk modeling and scenario development and behavioral science. So, certainly there are some biases that jump immediately to mind for me. So, confirmation bias is one of them, like when you’re developing a scenario, you just really, really, really struggle to believe that things won’t go according to plan. The idea that you could run into something unexpected is one that your brain will just resist accepting, right? It will go and look for all of the evidence that tells you it’s going to be okay and everything’s going to run the way that we anticipate.

Brooke: Even if we get past that and say, “Okay, well, I acknowledge that something could go wrong,” the next layer of defense against action, if you will, is probability neglect, saying, “Okay, well, sure, this horribly catastrophic thing could happen, but it’s such a vanishingly small probability that I’ll just round it off to zero, and then it’s going to be okay. I acknowledge that it’s possible, but I won’t engage with this deeper idea that it’s actually plausible, that this not only could happen, but might happen. I’ll round off could happen, to not actually going to.”

Brooke: And there’s definitely something there around statistical biases, as well. So if we think about the probability that there will be a flood in any one year … So actually, a former guest that we had on the show, Dan Kaniewski, talked about this a little bit. He talked about changes in the way that risks around flooding are communicated, that if we talk about the hundred-year waterline, the likelihood that that will happen in any given year is one in a hundred, but what they discovered was more helpful in terms of conveying the real meaning of that for homeowners in particular is to say, “The likelihood of one of these floods happening during the lifetime of your mortgage is a certain percent.” And there, you get something much higher, right? People will be too happy to round 1% to, “It’s not going to happen.”

Brooke: But once you get up to … I gather it will be somewhere in the area of 30% over the course of a mortgage, that you’re rolling these dice every single year, aggregating those probabilities is something that intuitively is very hard. I mean, I don’t consider myself to be any slouch with probability, but even just now, live as I’m talking to you, I’m having trouble churning through the number and coming up with exactly the percentage of how likely that is to happen in the lifetime of a mortgage. And that shows the importance of taking account of these kinds of cognitive biases in the way that we communicate what it is that we’re talking about here. And then, of course, present bias is the next one, saying, “Well, even if that’s going to happen, that’s down the road, and this thing is happening right now.”

Brooke: We’re so committed to the status quo and just sticking with what we know and what’s predictable, that we will discount the future gains, both because of the probability issue, but also because they’re in the future, and future enjoyment is always discounted relative to the present. So, that’s more around the cognitive biases of just coming to grips with a scenario and the need for change. Those are biases that are maybe more relevant around developing the political will to act. In your work, and maybe we can shift here towards more social and cultural dynamics, what are the challenges that you’ve seen in terms of translating that into action, so creating barriers to forecasting and acting on what we learn?

Sanjay: One way to think about it is to think about what you would do if you did foresight around human resources, and what kinds of gaps there are in bringing into organizations or training people to come into organizations who have an ideal balance of short and long-term thinking, and can turn long-term thinking into meaningful ways of thinking about how to address the present. Currently, the opportunity for that tends to be greater in privately held organizations. And [the late]  Arie de Geus, who is a former a Royal Dutch Shell scenario planner, wrote about 500-year companies that made it through many different crises and dislocations.

Sanjay: And one of the key elements of that longevity was loyalty to a community and the physical spaces of the operations that these organizations had. They were as diverse as a company making sake to a manufacturing organization. And so, the loyalty to the community, over time, the provision of support when times were poor to loyal employees, those are the sorts of things that helped with these dislocations. So, how you create an environment where a scenario process, for example, if it were about talent, indicated a blind spot in the right mix of short- and long-term thinking inside an organization, could lead to a strategic decision at the top that, “In our hiring practices, we’re going to need to look for a new cognitive skillset that we’re going to need to test for and evaluate people for coming into an organization.”

Sanjay: And I think that’s one of the ways to think of it, because I don’t think you can necessarily take an existing organization, unless you sift through the people in your organization and do some kind of cognitive approach to see how people balance long- and short-term thinking in how they think about the business. Unless you can sift through that inside your organization, you also have to, in part, build a new organization and renew the organization in ways that are very conscious in order to have those right mindsets at the table by default. Currently, we really have to search for those people who can understand things in a nuanced and more contextual way.

Sanjay: And what’s been lost in a lot of hiring in the past years has been this nuance. So people who are hiring and people who are interviewing, often are looking for people who sound very assured, who aren’t that good at nuance, who don’t explain in a very subtle way … In their response to questions, they’re made to sound as if they’re pitching something constantly. And those are cultural barriers to developing the right kind of strategic thinking within an organization. And those are things we need to watch for because we have plenty of graduates who can think in a nuanced way, and plenty of leaders who are maybe hidden inside their organizations, who have those skills already and need to be identified. And scenarios, as part of an organizational transformation process, can be part of that.

Brooke: So, that’s interesting. You raise the challenges around hiring, but also around the continuing culture once you arrive within an organization, right? It’s not just about choosing the right people at the outset, it’s also about continuing to develop them and to give them an ecosystem in which the skills that you spent so much time and energy hiring for in the first place actually get fed, continue to develop and have space to grow and to deliver the impacts that you were hoping for when you chose for them at the beginning.

Brooke: Thinking about this more, encapsulated just around the scenario design process, how is it that we can create that process in such a way that takes account of these social and cognitive dynamics of the participants in order to promote this kind of microcosm in the forecasting exercise of what it is what you just described?

Sanjay: Some areas I’ve seen in scenario planning in the past have really centered on who is involved. I think a bias towards youth, a bias towards diverse participants, a bias towards perhaps immigrants who’ve left countries of origin because of political or environmental or social dislocation, will bring sort of new insights, because the lived experience of crisis and adapting to crisis is there. And so, in a converging crises context, you also want people who have a lived experience of knowing what it feels like experientially to sense that the environment has changed in a way that things can no longer operate the way they once did, in a way that threatens integrity and wellbeing of an individual, a community, an organization. And organizations, in a sense, are different communities of interest within an organization doing different things, sometimes at cross purposes, sometimes very nicely, positively and synergistically.

Sanjay: And what we’re going to need to do is use techniques like scenario planning to build the social capital, to build the relationship capital, that then allows the technical systems and other systems to be used more effectively and for the strategic process to be more effective and congruent with a changing contextual environment. And what we’re going to see in this century is significant wealth destruction because of the converging crises context. We need solid, stable organizations, and to do that, foresight is going to be seen to be one of the most important areas for organizations to build real capacity and maturity.

Brooke: So, the importance of foresight and the value of foresight increases as predictability decreases. As things are stable, foresight loses its value. But I don’t think anyone’s too worried about the situation being overly stable these days, so I hope that that’s a clear illustration of the value of this kind of approach. And we’ve been talking about how to integrate that with behavioral science, taking account of the cognitive and social factors that go into that. What do you think the biggest challenge is right now, or the biggest bottleneck right now in terms of scaling up foresight capacity or foresight deployment? So for instance, something that you and I have discussed previously is around the low level of supply of people who are trained in foresighting, that there’s just not a huge glut of experts out there on how to do this. So, that’s definitely one. Are there other gaps that you’ve identified in terms of push side or pull side pressures that can put constraints on how effectively we’re going to be able to scale this up?

Sanjay: Well, one is the short-termism of market mechanisms. So, organizations that can profit potentially, like hedge funds, in this sort of environment, might actually be able to use things like scenario planning, war gaming, different kinds of methodologies to adapt to this sort of environment. That’s one area, is that there are few organizations that are going to have the wherewithal, organizationally or operationally, to adapt to this change in context. That’s one piece in terms of organizational preparedness and capacity. The other is, of course, what you mentioned earlier, which is that there aren’t that many people, like me or some other people who are out there, to help guide the process and help frame the right questions, who have enough depth and experience, the right amount of a priori experience, and also be deep enough level of engagement in being concerned about the future, that one doesn’t feel or that I don’t feel invulnerable to it.

Sanjay: And a lot of young people are feeling that leaders inside the organizations they work for feel themselves to be invulnerable because of the benefits they’ve received and the status they’ve accrued. And they aren’t in a shared experience of joint vulnerability to a shifting context or environment. So I think that organizations that have an alignment between leadership and the youngest employees coming into the organization, that’s another sort of intergenerational gap that’s playing out on the ground as well as inside organizations. So on the ground, it’s nicely exemplified by the FridaysForFuture movement, and youth describing what the intergenerational injustices are in terms of the adults not addressing the problem adequately for young people. But that dynamic’s also occurring within organizations. And so then, the behavioral incentives for collaboration and cooperation across generations, which is needed inside mature organizations, is something that behavioral science may also be able to address.

Sanjay: The other piece is that because the timeframes are sort of collapsing, there’s less time to do more and more things. You need the foresighting piece, but you also need the behavioral science to understand how to help people perform in a more constrained and likely higher stress environment. And all the tools we have in terms of understanding the human being and the human process of decision-making and social capital building that improves decision-making is very important, because we know that in a group setting, if one person is stressed and the team environment is constructed properly, other people can take over and improve the decision-making of the weakest link on the team at that moment.

Sanjay: And the idea is that people shift in and out of their capacity to deal with stress and pressure, and we also need to design teams inside of organizations to take advantage of behavioral science and the strengths that occur when you have resilient teams that can account for momentary lapses or lack of resilience. We shouldn’t see people as continually resilient. We need to see them as having different levels and capacities of resilience that affect their cognition and affect their decision-making and their behavior. And we’re going to need to work with those things more skillfully. So I think now is the time of really fusing foresight practice with behavioral science and organizational psych.

Brooke: I think that that’s an excellent place to leave off this conversation. Sanjay, thank you so, so much for the rich insights that you’ve shared with us today. And I hope that we can have you back soon.

Sanjay: Thank you very much. It’s a pleasure to be part of it.

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