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Rita McGrath

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August 16, 2016

Insight into unintended consequences-anticipating the effects of low oil prices

Over the years, I’ve cited and used some of the work done by the Futures Strategy Group principals in their development of very robust tools that help organizations anticipate (not predict) what might happen in the future.  It’s interesting, therefore to read a post by one of their Principals, Patrick Marren, written in 2005.  He was summarizing some topics that had come up many times in the course of consulting work with governments and other organizations, and said the following, in a critique of the then-in-vogue desire for many governments to create energy independence from the Middle East.

As he says:

The Arab Middle East is witnessing the fastest population growth of any region in the world. That population is dependent on oil revenue to feed itself. If the rug is suddenly pulled out from these nations, and the rest of the world finds alternative sources of energy, these people will not simply go away.  Nor will their view of the West (and the East for that matter) improve. And given likely increases in the general connectedness of the world, their ability to “reach out and touch someone” will not have declined either.  They will  most likely view themselves as the victims of a conspiracy, and will redouble their efforts to strike out at those they deem responsible. 

As it happens, the rise of fracking and the plummeting price of oil effectively realized this scenario.  So much of what has happened since then, from the youth movement that led to the Arab Spring, to the rise of ISIS and the current tensions facing countries like Saudi Arabia is aligned with this insight.

I ran across Marren’s work in the context of research I’m doing into what strategy means today in the context of a world of transient and unpredictable changes to business and organization.  As Marren observes, you can’t predict the future as it will never conform to your expectations.  But you can anticipate by imagining a lot more scenarios than will ever occur, which effectively broadens the range of contingencies you can anticipate.

This is a point similar to ones that my colleague Gokce Sargut and I made in our article on how leaders can learn to deal with complexity.  Using your imagination, broadening the range of contingencies you consider and valuing diverse inputs can be crucially important in a world of unpredictable change.

 

Filed Under: Business Strategy, Complexity, Insights and ideas

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