Anticipatory Governance and Strategic Vision: Opportunities and Risks

1 GOLD MERCURY INTERNATIONAL white paper: Anticipatory Governance and Strategic Vision: Opportunities and Risks

ANTICIPATORY GOVERNANCE

ETHICS

ACCOUNTABILITY

Anticipatory Governance and Strategic Vision: Opportunities and Risks VISIONARY LEADERSHIP BRIEFING

Thinking anew to manage risk and create your own opportunities in the era of global complexity.

Key words: Change, uncertainty, anticipatory governance, anticipatory thinking, risk, enterprise risk management (ERM), compliance & ethics, mental models, cognition biases, paradigms, corporate vision, accountable governance, entropy, complexity, taking for granted, assumptions,

triangulation method, decision theory, game theory, Pascal’s Wager, utility, systems thinking, leverage points, chaos theory, intuition, artificial intelligence, reality, speculation, strategic planning, foresight, sustainability.

2 GOLD MERCURY INTERNATIONAL white paper: Anticipatory Governance and Strategic Vision: Opportunities and Risks

“Google’s artificial intelligence: will it make

Changing the traditional dogmas of thinking and decision making: Time to think sustainable paradigms.

decisions for us in the future?”Google announced in 2007 plans to build the world’s most powerful human database computer that will be able to predict our every move as well as market trends, fashions, fluctuating moods and human behaviour. Critics say that it will use the information to direct and influence our trends and instead of forecasting what we will need, it will be suggesting what we need according to their own influences. “It is almost like digitizing the human psyche.”

Our thinking ability is coming to a standstill. How, and with what framework, can an organisation’s ability to think be rebooted? A new philosophy of thinking must be embraced: Anticipatory Governance. Anticipatory Governance is about thinking ahead, outside of the traditional box and based on a new sustainable vision of the organisation and the individual. The organisations of the future must become sustainably smarter in how they think, strategise and plan for the future.

The future revolution will be in how we evolve our thinking processes and ethics to deliver meaningful and constructive outcomes beyond the traditional economic view of the enterprise that merely measures financial results. This cannot be done with the traditional dogmas of thinking.

As the global community is rising to meet new challenges that they have never experienced before, they are finding that old solutions and old ways of thinking are no longer as applicable as they once were. In this challenging new age, people are being forced to assess their past governance practices and risk management solutions and to look for alternative methods of making decisions to think ahead and avoid risk. While people have not seriously changed in their perception (mental models) of risk, they have devised new ways to avoid it. We propose a new paradigm in leadership thinking: Anticipatory Governance as a new way of thinking and delivering more positive outcomes based on sustainable decision making.

Anticipatory Governance addresses long term solutions as a way of solving short and long-term problems with a minimum of resources. The ability to address as many foreseeable problems at one time and to take the concerns of all actors, known and unknown, into consideration will prove to be some of the most valuable skills that managers will have to use in confronting the new organizations needed for the twenty-first century.

3 GOLD MERCURY INTERNATIONAL white paper: Anticipatory Governance and Strategic Vision: Opportunities and Risks

Boris Porfiriev (born 1955) earned his Ph.D. from the Russian Academy of Sciences, Moscow. He is the author of Disaster Policy and Emergency Management in Russia: Theory and Practice.

One of the first ways to address risk and opportunity seeking is to appropriately understand how people will perceive risk. The riskiness of a venture is usually dependent on several factors: degree of familiarity, perception of control, catastrophic potential, equity, and level of knowledge about the event (Slovic 283). By using Anticipatory Governance and assessing the short-term and long-term effects of an action, there will be a greater sense of familiarity and control and the catastrophic potential of the venture will likely not seem so great. To minimize the impact of the decision, it is also important to make sure that all actors feel that their participation is voluntary (Slovic 282); when participants feel forced into taking a risk, they are more likely to think it is more dangerous and are less likely to cooperate toward the end goal.

Example: If a company is considering re-organizing a branch because it thinks that there is a more efficient way to distribute its employees and maximize output, it should include all stakeholders in the decision-making process. If they choose to leave out all employee representatives, there is likely to be some resentment, especially for those who were employed the longest and were familiar with a specific organizational culture.

There might also be increased fear regarding the potential implications (job loss, additional hours without compensation, etc.) if they are not made known to all up front. These fears could manifest themselves in a decrease in productivity and an unhappy workforce.

Social Decision theory: The most important concern of social decision theory is the aggregation of individual preferences (choices) into collective preferences (choices). The central problem is to find, given a set of individual preferences, a rational way to combine them into a set of social preferences or into a social choice.

This is especially important if the impact of the decision, and therefore potential risk, will affect only a small group of people who were involved in the decision, or a larger, general group who were included without their consent. Risk perception is amplified if it is perceived to affect the general public rather than a few individuals (Sjöberg 2007, 3).

Risk management theories are many and varied. They involve between three and seven steps on average and are designed to be cyclical to be capable of assessing the ability of the proposed solution(s) to address the problem and if new problems have arisen. Boris Porfiriev believes that risk should be managed by performing the following steps: hazard identification, analysis and evaluation, the treatment of risks and risk communication. From a different perspective Kallman and Maric have proposed a five-step solution: program development, risk analysis, solution analysis, decision process and system administration. They emphasize the management aspect of risk management more than identifying the risks. However, the importance of management skills is made clear in working with the stakeholders and considering their needs, making them aware of the process to gain their support.