How can we plan for the long term? Inside the mind of a famous strategist

Original source: SimoleonSense.com .

Via Ted O’Callahan @ Yale’s QN

Businesses need to try to peer 30 or more years into the future as they make investment decisions. How can they separate long-term trends and opportunities from the rush of the present? Strategist George Friedman, author of The Next 100 Years, says to look at constraints, not possibilities.

Q: In The Next 100 Years you point out that extraordinary unexpected changes actually happen as a matter of course: Londoners in 1900 likely felt that they were securely in the center of the world, someone in Japan or Germany in 1950 would have had a hard time believing those countries would rebuild to become the second and third largest economies by the end of the century, and someone in China in 1970 would have as hard a time imagining the country would become the fourth largest economy by 2007. How do you go about looking into the future to make forecasts?
By looking at constraints, not possibilities. The most interesting aspect of any political or business decision maker is what he can’t do, because of political or market decisions. We spend most of our time eliminating the impossible or the improbable. Many policy makers act as if they had an infinite palette to choose from. In fact they have very few choices. For example, when we said that there would be very little change in foreign policy after President Obama took office, it was based on an understanding that whatever he subjectively may have wanted to do, he had very few options, and that he would basically continue President Bush’s foreign policy. We forecast, particularly geopolitically, by eliminating the impossible, then looking at what’s left.

Interesting excerpt

Q: We seem to have a pattern, as humans, of thinking of our moment as particularly exceptional. How do you deal with that bias for the present?
Well, remember, for human beings, this moment is exceptional. It’s the moment in which we are alive. Those who succeed in life are those who can live outside of this moment and think a little way ahead. So, for example, to invest in Microsoft when Digital Equipment Corporation says there’s no demand for personal computers, you have to imagine the future. You have to be able to think in terms of cycles—long cycles and short cycles. But that is an act of will and discipline. At a certain point, you say, the way that I am going to achieve my goals is by not thinking about this moment. And then you realize that, aside from the fact that you happen to be alive right now, this is a pretty ordinary moment. And the more you can discipline yourself not to get excited, the more you can find what actually matters.

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