Anomalies & Enigmas
Forward planning in the Information Age
After I had finished my rather exceptional education at the research establishment, I didn't stay on to fulfil the role I had been trained for. Not a single one of the students did. As with many forward thinking plans, some vital detail had not been taken into account. The conception of the plan to train bright young students to become important links between scientists and engineers was flawless. There must have been much thought put into the course design; much money spent on buildings and teaching staff. Despite all this intellectual effort nobody had stopped to think of what the students' attitudes might be when they reached the end of their five year training.
At the end of the course, all of us fortunate students found ourselves at the forefront of an emerging explosion of new technology. Our knowledge and training was unique. There were countless opportunities in private industry available to us; companies were vying with each other to take us on. Didn't any of the planners foresee this situation? It appeared not to be so. At the end of the five years, all of us graduating students were offered a standard graded post which would slot us into the traditional hierarchy of government employees. This fixed both status and salary and was grossly inferior to anything that was being offered by a new industry hungry for suitably educated employees.
Now it is easy to criticise such a blatant oversight in retrospect. At the time of the scheme's conception it would not have been readily apparent that such a specialised education would have been of value to employers other than the research establishment itself. Technology had sudden taken hold. It had come at an unprecedented pace. It would have been very difficult to have anticipated and make allowances for such a seemingly unlikely outcome when the scheme was being planned.
This is the phenomenon of emergence. The unforeseen rapid change of conditions which is the dominant feature of advancing technology, particularly digital communication technology. Changes, consequences and effects occur so unexpectedly, so swiftly and so unpredictably that there is no way that allowances can be made beforehand. This reduces all strategies based upon carefully planning to become redundant even before they can properly be put into effect.
How can you plan anything if you don't know what the conditions and the situation will be like when the plan reaches fruition. Time and time again, in this new world of digital technology, we are seeing companies caught out by the effects of emergence. New technological advances, new hardware, new software, competitor initiative: all conspire and interact to make a nonsense of any form of forward planning.
Yet, in the traditional Industrial Age, business strategies are always based upon forward plans and predictions.
At the commencement of writing this book, I was subscribed to an Internet discussion group focussed on Web hosting. One of the subscribers asked how to go about creating a business plan. I sent in a post suggesting that a business plan would be likely to turn out totally useless in e-commerce. It was as if I'd walked into a church service at Westminster Cathedral and proclaimed "There is no God".
Instead of the usual polite and informative responses which are normally accorded to postings, I was immediately bombarded with derision and scorn. My post was a heresy. "How can anyone go into business without a plan", they wanted to know. "How can you raise capital without providing a credible cash flow and profit and loss account?".
Knowing what I did about the chaotic variance of the Internet environment it didn't make any sense to me that any kind of forward planning could be relied upon as a credible basis for loaning money, even venture capital. Why should this not be obvious to everyone?
To check out how widespread this need for a business plan was, I made appointments to see the loan managers of several banks in my home town locality. I explained to each that I'd come to negotiate a loan for a business connected with e-commerce. Every loan manger started with the same question. "Do you have a business plan?".
I then patiently explained that I was contemplating doing business in the rapidly changing world of digital communications and I didn't think it practical to draw up any business plan. "But cash flow? You must have a cash flow?", each responded. I'd then explain why it was totally impossible to predict any kind of cash flow and finish up by adding that in any case I'd be starting off by making no charges for my services and products. Understandably, none of the managers wasted very much more time with me.
It then dawned on me that the conventional business world had no conception at all of a business structure outside of anything that couldn't be described by a formal business plan. How then, can you plan a business without using a conventional business plan? How can you describe a business strategy without the need to predict revenues and earnings?
With a conventional business mind set, such a possibility is not conceivable. However, to anyone using the conceptual tools used for dealing with chaos, uncertainty and complexity, the solution is perfectly straightforward. The key is in taking advantage of the phenomenon of emergence: a phenomenon feared by established businesses but a boon to the entrepreneur.
Emergence belongs to chaos theory (which I'll get to later), but, the game of poker exhibits this effect rather neatly and illustrates how business plans and cash flows are totally inappropriate for strategies which deal with uncertainty, competition and emergence.