Post ceteris paribus

In a not too distant past, we used to model and calculate how things would develop with a ceteris paribus assumption of all other aspects of the issue than those we analysed. There was, and is, a rationale for “all else being equal”. Complexity is reduced. Our computational and cognitive capabilities are at ease. And we can produce an answer, which, according to the late management thinker Peter Drucker, too often is more important than asking the right questions.

The times we are living see change happening at an accelerating pace. The complexity of issues at hand is increasing, as we also appreciate the interconnectedness between micro, meso and macro level processes all around the globe. All in all, uncertainty is genuine. It cannot be reduced to risk and probabilities. The uncertainty we are confronted with in decision making does not follow the probability distributions underlying our traditional decision support models. This context indicates that we must accept living in a post ceteris paribus world.

Facing the complexity challenges, decision makers should not go back to tossing the coin. Fortunately, there are increasing possibilities to get support to deal with complexity. Advances in the computer technologies, not even to mention the emergence of supercomputers, allow us to simulate myriads of potential futures that the decision maker might experience coming at him or her. Artificial intelligence, making use of increased computational power, contributes with further support, especially in cases where elements of pattern recognition, in the broadest meaning, comes into play. The theoretical frontiers and their applications in domains like complexity, systems, chaos etc. are also advancing rapidly.  And virtual reality can support decision makers to experience futures etc. So, we do not need to include ceteris paribus conditions to be able to deal with complexity.

But there is one crucial constraint, our cognitive processing. Most of us are unfortunately not unconstrained in our capacity to deal with loads of information and tons of options to go forward. First, we are very selective in paying attention to information, and biased in how we allow our brains to process the information. Research shows that we tend to go with what is familiar, and, perhaps more worrying, we tend to put a higher probability to something that is in some way familiar to us to happen, than what is unfamiliar. One consequence is that we will face more surprises, the future did not play out as expected. But that expectation did probably not count for the unfamiliar part of the complex world coming at us.

So, tools are available, but all of us are not well prepared to benefit from them in dealing with the complexity of futures. Scenario planning offers one way to cope with the challenge. Pierre Wack, whose work at Shell, established scenario practice as a tool for strategic planners and decision makers to cope with genuine uncertainty in a world of accelerating change and increasing complexity. The manufacturing of logical consistent, analytical and emotionally sticking descriptions of plausible futures enables decision makers to make journeys into futures, futures which are outcomes of very complex dynamics but depicted in an understandable way. This enables cognitive processes to put output from decision support into different, and new perhaps previously unfamiliar, contexts and use it successfully.

Let us make complexity a friend, and enjoy living in a post ceteris paribus time.


Mikael Paltschik
Senior Advisor
050 344 6953
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